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ANALYSIS 


OF  THB 


Fanctions  of  Honey 


BY 


WM.  M.  STEWART 

U.  S.  SENflTOK  FROfl  NEVflDfl. 


Washinotoii,  D.  C: 

WM.    BALLANTYNE   A   SOKg, 

428  Sbvinth  St.  N.  W., 

1898. 


CorTRIQHT,   1898,  BT 

Wm.  M.  Stkwabt. 


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DEDICATION. 

This  little  volume  is  dedicated  to  the  young 
men  and  women  of  the  United  States  who  are 
contemplating  matrimony  with  its  inevitable 
responsibilities.  The  comforts  of  life  with 
which  the  young  women  of  this  country  have 
been  surrounded  in  the  homes  of  their  fathers, 
:built  in  the  better  days  of  the  Republic,  cannot 

i^be  provided  by  the  young  men  of  the  present 
day  on  account  of  the  hard  conditions  which 
environ  them.  The  families  and  friends  of 
young  women  opi^ose  their  marriage  with 
young  men  otherwise  worthy,  on  account  of 
the  fear  that  it   will  be  impossible  for  the 

-  united  efforts  of  both  to  save  them  from  pov- 

p  erty  and  want. 

The  author  believes  that  a  careful  study  of 

this  book  will  enable  the  people,  through  the 

intelligent  exercise  of  the  elective  franchise,  to 

restore  the  conditions  enjoj^ed  by  former  gen- 

V  erations,  when  happy  homes  were  established 

v"  throughout  our  vast  domain.     If  this  can    be 

^  accomplished,  the  barrier  which  fear  of  pov- 
V^  erty  has  erected  between  the  young  men  and 

N  women  of  the  country  will  be  removed  and 
the  sacrament  of  marriage  will  again  promise 
happiness,  prosperity  and  progress. 

WM.  M.  STEWART. 

Washington,  D.  C,  April  12,  1898. 


CONTENTS. 


PAQB. 

MONEY 7 

VALUE 19 

PRICE 23 

BIMETALLISM 31 

RATIO '.  ■■•  41 

MOTIVE  FOR  DEMONETIZATION 51 

MONEY  IS  NATIONAL 57 

PARITY 69 

FOREIGN  COMMERCE 75 

LABOR  INTERESTS 81 

BANK  CURRENCY 8S 


MONEY. 

Money  is  a  fundamental  condition  of  the  ex- 
istence of  society.  Men  must  live  in  society  or 
perish.  No  human  being  was  ever  able  to  pro- 
long his  existence  for  any  considerable  time 
without  the  use  of  what  others  produce.  All 
the  authors  on  political  economy  agree  that 
mere  barter  without  money  involves  isolation 
and  extermination,  which  the  most  primitive 
savages  avert  by  the  invention  of  some  kind 
of  money.  If  ever  a  tribe  of  savages  existed 
without  using  sticks,  shells  or  some  kind 
of  tokens  as  money,  the  fact  has  not  been  re- 
corded and  the  possibility  of  such  existence  is 
denied. 

As  life  is  the  potential  principle  or  force  by 
which  the  organs  of  animals  and  plants  are 
started  and  continued  in  the  performance  of 
their  several  and  co-operative  functions,  so 
money  is  the  potential  principle  or  force 
through  the  workings  of  which  men  associate 
their  efforts  and  produce  industrial  society. 


8 

A»  law  i«  "si  rule  or  method  of  action  or  or- 
der of  sequence,"  which  has  not  been  fully  de- 
scribed in  the  thousands  of  law  books  pub- 
lished for  that  purpose,  and  can  never  be  de- 
scribed in  detail,  so  the  infinite  variety  of  uses 
to  which  money  may  be  applied  will  never  be 
written  in  books.  Every  attempt  to  define 
law  by  enumerating  the  various  laws  of  na- 
ture and  of  man,  and  describing  their  func- 
tions, has  been  a  total  failure,  and  the  at- 
tempts to  define  money  by  a  full  description 
of  its  uses  have  been  equally  unsuccessful. 

Aristotle  comprehended  the  money  question 
and  pointed  out  in  a  simple  statement  the 
difference  between  commodities  produced  by 
labor,  and  money  created  by  law.  In  his 
"Ethics  and  Politics,"  3rd  London  edition, 
1813,  vol.  1,  page  375,  he  says: 

'The  comforts  of  life  require  an  interchange 
"of  different  works  and  exertions.  The  brick- 
flayer,  for  example,  must  exchange  the  pro- 
'^duction  of  his  labor  with  the  shoemaker;  and 
"the  bargain  will  be  just  when  the  works  ex- 
"changed  bear  the  same  proportion  to  each 
"other  as  do  the  exertions  of  the  artisans  by 
"whom  they  were  produced.     If  the  exertions 


^'of  the  bricklayer  be  more  valuable  for  their 
"duration  or  their  diflficulty  than  those  of  the 
"shoemaker,  the  works  produced  by  the  latter 
"must,  to  render  the  bargain  equal,  bear  the 
"same  proportion  numerically  to  those  pro- 
"duced  by  the  former;  thus,  if  the  bricklayer 
"has  consumed  a  thousand  times  as  much  labor 
"in  making  a  house  as  the  shoemaker  has  done 
"in  making  a  pair  of  shoes,  a  thousand  pairs  of 
"shoes  must  be  given  for  one  house.  The  same 
"thing  happens  with  respect  to  all  other  acts 
"which  derive  their  whole  utility  from  the  mu- 
"tual  exchange  of  different  sorts  of  labor,  and 
"which  could  not  long  be  maintained  unless 
"the  exertions  of  one  artisan  in  one  way  were 
"nearly  balanced  and  compensated  by  those 
"of  another  artisan  in  another.  A  community 
"could  not  subsist  composed  wholly  of  physi 
"cians  or  wholly  of  husbandmen;  it  must  con- 
"sist  of  physicians  and  husbandmen;  and  other 
"classes  of  individuals  employed  in  different 
"trades  and  different  professions.  But  that 
"operations  and  works  of  such  different  kinds 
"should  be  fairly  exchanged  for  each  other,  it  is 
"necessary  that  they  should  be  nearly  commen- 
"surate;    that  is,  that  all  of  them  should  be 


10 

"capable  of  being  estimated  with  tolerable  ac- 
"curac^  bj  eomparison  with  one  common 
"measure.  Hence  the  introduction  of  money; 
"by  means  of  which  all  those  operations  and 
"works  are  compared  in  value  with  each  other, 
"and  their  relative  excesses  or  deficiencies  as- 
"certained  with  sufficient  correctness  for  all 
"practical  purposes.  In  reality,  value  depends 
"on  the  mutual  wants  of  men,  which  form  the 
"great  bond  of  society;  for  unless  their  wants 
"were  mutual,  exchange  could  not  be  effected; 
"but  money  is  used  by  convention  as  the  repre- 
"sentative  of  all  things  wanted;  since  it  serves 
"as  a  pledge  and  surety,  that  whenever  those 
"wants  occur  they  will  be  speedily  gratified; 
"and  its  name  is  derived  from  the  word  signi- 
"fying  law,  which  indicates  that  it  is  founded, 
"not  on  nature,  but  on  convention;  and  that 
"human  laws,  which  have  thought  fit  to  em- 
"ploy  it  as  a  measure  of  value,  may,  at  pleas- 
"ure,  set  this  use  of  it  aside,  and  employ  some 
"other  measure  in  its  stead.  Money,  which 
"represents  the  value  of  all  other  things,  va- 
"ries  in  its  own;  but  its  variations  are  less 
"considerable  than  those  of  most  other  sub- 
"stances.       It   serves,  therefore,  to  fix  their 


11 

"price,  and  to  render  them  commensurate  with 
"each  other,  thus  performing  a  function  essen- 
"tial  to  the  existence  of  civil  society;  for  com- 
"munities  could  not  subsist  without  exchange, 
"nor  exchange  without  equality,  nor  equality 
"without  a  common  measure.  The  various 
"kinds  of  labor,  and  the  works  thereby  ef- 
"fected,  cannot,  indeed,  be  accurately  com- 
"pared  and  exactly  measured,  either  by  each 
"other  or  even  by  money;  but  they  may,  by 
"means  of  the  latter,  be  estimated  with  suflS- 
"cient  correctness  for  maintaining  that  com- 
"mercial  intercourse  which  is  essential  to  the 
"supph-  of  our  numerous  exigencies." 

The  great  variety  of  things  which  have  been 
used  as  money,  at  different  times  in  different 
countries,  has  associated  money  with  commod- 
ities and  misled  many  of  the  so-called  econo- 
mists. The  number  of  men  in  high  official 
station,  and  of  professors  of  political  economy 
in  American  colleges,  who  regard  money  as  a 
commodity  and  not  a  function  created  by  law, 
seems  to  be  constantly  increasing.  The 
number  and  variety  of  commodities  that 
were  once  used  as  money,  and  by  law  or  cus- 
tom   would    pay    debts    and    buy    property. 


12 

which  now  possess  no  money  function,  ought 
to  suggest  to  political  economists  that  such 
commodities  were  never  money  in  themselves, 
but  that  the  money  function  connected  with 
them,  while  it  existed,  was  created  and  main- 
tained by  force  of  some  law  which  the  people 
obeyed.  The  highest  courts  of  England  and 
America  agree  with  Aristotle,  and  hold  that 
money  is  the  creation  of  law,  and  that  every 
sovereign  power  may  create  money  without  re- 
gard to  the  material  which  is  used  for  that 
purpose.         ■ 

The  leading  case  in  England  is  known  as 
the  Mixed  Money  case.  It  arose  in  the  reign 
of  Elizabeth,  and  is  reported  in  Davis'  Reports 
of  Decisions  of  that  period,  page  48.  It  was 
decided  in  that  case  that  the  power  to  create 
money,  make  it  a  full  legal-tender,  and  to  use 
any  material  whatever  suitable  for  that  pur- 
pose was  inherent  in  every  independent  state, 
and  that  the  money  current  by  law  at  the  date 
of  payment  was  the  money  of  the  contract,  be- 
cause all  contracts  were  made  with  a  view  to 
the  sovereign  power  of  the  government  to  cre- 
ate full  legal-tender  money  in  payment  of 
debts. 


13 

During  the  Civil  War  the  greenbacks  were 
made  legal  tender  for  all  debts,  public  and 
private,  except  duties  on  imports  and  interest 
on  the  public  debt.  It  was  contended  after 
the  war  that,  although  money  was  the  creation 
of  law  and  the  power  to  create  it  was  an  at- 
tribute of  sovereignty  in  every  independ- 
ent State,  yet  the  Constitution  of  the 
United  States  did  not  confer  that  sovereign 
power  upon  our  Government.  The  question 
was  most  elaborately  discussed  and  decided 
by  the  Supreme  Court  of  the  United  States  in 
the  legal-tender  cases,  and  the  doctrine  of  the 
Mixed  Money  case  was  not  only  approved,  but 
it  was  declared  that  the  United  States  could 
make  full  legal-tender  money  of  paper  or  of 
any  other  material  in  peace  or  war;  that  the 
whole  matter  rested  in  the  discretion  of  Con- 
gress, and  that  no  law  which  Congress  might 
pass  creating  legal-tender  money  could  be 
questioned  by  the  courts.  Similar  decisions 
have  been  made  by  nearly  every  civilized  coun- 
try in  the  world.  The  power  to  create  legal- 
tender  money  by  law,  without  regard  to  the 
material  u-sed,  is  fully  settled  and  established 


14 

by  the  concurrence  of  the  highest  tribunals  of 
all  civilized  nations,  ancient  and  modem. 

The  contention  maintained  by  the  fading  in- 
tellectual capacity  of  economists,  or  by  the 
selfish  cunning  of  money  getters,  that  gold  is 
money,  must  be  regarded  in  the  same  light  as 
the  contention  that  the  world  was  flat;  or  that 
witchcraft  was  a  well  known  device  of  the 
devil.  The  worship  of  gold,  and  the  spolia- 
tion of  the  masses  by  the  classes,  are  kindred 
illustrations  of  the  afflictions  through  which 
struggling  humanity  is  compelled  to  pass  in 
establishing  justice,  liberty  and  equality. 

Emphasis  is  placed  on  the  all-important 
truth  which  the  Supreme  Court  of  the  United 
States  has  settled  by  repeated  decisions, 
namely,  that  it  is  the  law  of  the  land  that 
whatever  Congress  declares  to  be  money  is 
such  to  all  intents  and  purposes,  without  re- 
gard to  the  question  as  to  what  material  is 
used,  whether  it  be  gold,  silver,  paper,  parch- 
ment, or  any  other  substance,  upon  which 
the  edict  of  sovereignty  can  be  manifested 
by  the  stamp  of  the  Government.  Those  who 
teach  otherwise  not  only  exhibit  their  igno- 
rance or  evil  design,  but  sow  the  seeds  of  anar- 


15 

chy  and  discord  to  overthrow  and  subvert  the 
law  of  the  land,  which  every  good  citizen  is 
bound  to  obey.  The  cunning  few,  generally 
calling  themselves  bankers,  who  deny  the 
right  of  the  Supreme  Court  to  declare  what 
the  law  is,  contend  that  the  United  States 
has  no  power  to  create  legal-tender  money. 
This  they  do  in  order  to  exercise  the  power 
of  the  Government  to  issue  money  for  private 
gain  at  the  expense  of  the  public  weal.  These 
are  the  real  anarchists  who  threaten  the  sta- 
bility of  our  Government. 

The  power  which  creates  money  and  com- 
pels all  creditors  to  receive  it  in  payment  of 
debts  is  the  same  power  which  creates  many 
other  intangible  functions  of  vast  importance 
to  the  human  race.  It  is  the  same  power 
which  creates  municipal  law,  commanding 
what  is  right  and  forbidding  what  is  wrong. 
The  law  which  inflicts  the  penalty  of  death 
for  murder  is  not  a  material  thing,  but  a  func 
tion.  The  same  is  true  of  the  great  body  of 
the  laws  of  any  country,  both  (;ivil  and  crim- 
inal. There  is  no  material  whatever,  whether 
gold,  silver,  paper  or  anything  else,  which  a 
creditor  might  not  be  compelled  to  take  in  dis- 


16 

charge  of  an  obligation  due  him  if  the  law  so 
commanded.  The  confusion  arises  because  the 
money  function  has  been  conferred  upon  a 
great  variety  of  commodities,  such  as  gold, 
s-ilver,  copper,  lead,  paper,  cattle,  slaves,  shells, 
fish,  and  the  like.  But  the  subject  is  made 
plain  when  we  reflect  that  it  was  not  the 
commodities  which  were  money,  but  the  force 
of  law,  or  custom  amounting  to  law,  which 
these  commodities  were  selected  to  represent, 
that  did  the  work  of  money. 

The  function  of  money  in  interchanging 
commodities  is  an  intermediate  service  which 
is  a  double  transaction.  Commodities  are 
bought  with  money,  which  constitutes  one-half 
of  the  exchange.  The  commodities  so  bought 
are  then  sold  for  money,  and  thus  the  ex- 
change is  complete.  Before  there  can  be  a 
demand  for  property  money  must  be  demanded 
and  procured.  Consequently,  there  is  no  de- 
mand for  property  without  a  preceding  de- 
mand for  money,  and,  therefore,  the  demand 
for  money  is  equal  to  the  demand  for  all  other 
things.  Every  intelligent  human  being  is 
striving  to  get  money,  not  for  the  purpose  of 
consuming  it,  but  for  the  purpose  of  using  it 


17 

to  supply  his  various  wants.  Nothing  can  be 
done  without  money.  Money  is  necessary  to 
buy  the  comforts  of  life,  to  conduct  commerce, 
to  carry  on  war,  to  maintain  government,  and, 
in  short,  to  do  anything  and  everything  need- 
ful to  enjoy  what  others  produce,  and  supply 
the  innumerable  wants  of  a  person  in  organ- 
ized society. 

This  great  intermediate  power  which  makes 
associated  effort  possible  has  no  more  analogy 
to  commodities  than  tlie  vitality  which  ani- 
mates material  forms  and  gives  them  life  hai 
to  the  ashes  of  the  dead  after  life  has  de- 
parted. 


19 


VALUE. 

Commercial  value  is  the  only  value  to  be 
considered  in  economic  science,  and  in  this 
treatise  the  numerous  misleading  uses  to 
which  the  term  is  applied,  will  be  disregarded. 
Value,  in  a  commercial  and  economic  sense,  is 
the  mutual  estimation  of  persons  in  making 
an  exchange  of  commodities.  In  other  words, 
the  concurrent  estimation  of  the  parties  mak- 
ing an  exchange  of  commodities  is  the  value 
of  each  commodity  exchanged  expressed  in  the 
other. 

Great  confusion  exists  in  the  public  mind 
on  account  of  the  improper  application  of  the 
word  "value,"  It  is  frequently  said,  ignorantly 
or  for  the  purpose  of  deception,  that  good 
money  must  be  composed  of  some  material 
having  intrinsic  value.  Many  well-disposed 
people,  not  knowing  that  value  is  extrinsic 
and  not  intrinsic,  are  misled  by  the  use  of  the 
term  as  applied  to  value.  If  they  would  re- 
flect they  would  readily  see  that  value,  in  aa 
economic  sense,  can  only  relate  to  propertj 
which  is  limited  in  quantity  and  for  which 


20 

there  is  a  demand  that  cannot  be  supplied 
without  sacrifice.  If  value  were  intrinsic  it 
would  hardlj  be  contended  that  air  does  not 
contain  more  intrinsic  value  than  gold. 
Should  any  one  doubt  this,  let  him  consider 
which  one  he  could  dispense  with  with  the 
least  injury  to  himself. 

The  fact  that  there  is  a  large  class  of  per- 
sons in  the  United  States  who  believe  or  pro- 
fess to  believe  that  value  is  intrinsic  would  be 
incomprehensible  if  the  history  of  every  age 
did  not  exhibit  similar  folly  which  subsequent 
ages  have  treated  with  ridicule  and  con- 
tempt. The  people  who  promulgate  this 
belief  speak  as  fluently  of  the  regulation  of 
value  by  the  law  of  supply  and  demand  as  do 
those  who  believe  that  value  is  extrinsic  and 
not  an  inherent  quality.  The  consideration 
that  if  value  were  intrinsic  in  gold  it  would 
be  unchangeable,  and  that  if  all  the  mountains 
were  gold  an  ounce  of  it  would  buy  the  same 
amount  of  wheat  or  any  other  commodity  as 
it  now  does,  makes  no  impression  whatever 
«pon  Buch  empirics  as  the  Clevelands  and 
HarriBons,  or  the  Sumuers  of  our  colleges, 


21 

or  their  followers,  who  maintain  the  absurd 
doctrine  of  intrinsic  value. 

The  intrinsic  quality  of  a  glass  of  water  at  a 
mountain  spring  is  equally  as  great  as  the  in- 
trinsic  quality  of  a  glass  of  water  on  the  Colo- 
rado desert.  A  glass  of  water  is  free  at  the 
spring  and  commands  nothing  in  exchange. 
But  a  glass  of  water  on  the  desert  may  com- 
mand an  exorbitant  price  when  the  traveler 
is  perishing  with  thirst  and  has  plenty  of 
money  to  buy  it. 

In  an  economic  sense,  it  is  as  impossible  to 
express  value  as  existing  in  a  single  object  as 
it  is  to  express  distance  in  a  single  point.  In 
value  more  than  one  thing  is  necessary. 
There  can  be  no  estimation  of  the  relation  of 
objects  where  only  one  object  exists,  and  there 
can  be  no  distance  without  extension.  The 
argument  attempting  to  show  that  value 
is  intrinsic  and  unvarying  in  gold,  when  re- 
duced to  its  last  analysis,  is  only  the  assertion 
that  an  ounce  of  pure  gold  is  always  worth  an 
ounce  of  pure  gold.  A  moment's  reflection 
will  show  that  every  commodity  measured  by 
itself  will  alwa3^  be  equal  to  itself. 


22 

The  functioD  of  money  is  not  to  act  as  a 
measure  of  itself,  but  to  be  a  common  denomi- 
nator of  all  other  valuable  things.  Wliy  are 
the  market  reports  published  and  universally 
read  by  the  business  community  if  such  re- 
ports do  not  show  the  value  of  commodities 
expressed  in  money?  If  value  were  intrinsic 
and  existed  in  the  things  bought  and  sold, 
and  was  not  fixed  by  the  estimation  of  the 
buyers  and  sellers,  why  publish  market  re- 
ports? If  value  is  intrinsic,  why  not  learn 
from  an  examination  of  the  commodities 
themselves  how  much  they  will  fetch  in  the 
market,  instead  of  followiag  the  price  of  things 
bought  and  sold  as  shown  by  the  daily  re- 
ports? 


23 


PRICE. 

Price  is  the  relation  between  money  and 
property,  expressed  in  terms  of  money.  The 
demand  for  money  is  equal  to  the  demand  for 
all  other  things  offered  for  sale,  because  noth- 
ing can  be  bought  until  the  purchaser  has  ac- 
quired the  means  of  payment,  either  in  cash  or 
in  obligations  which  are  money  futures.  Con- 
sequently every  demand  for  property  follows 
a  previous  demand  for  money.  All  the  prop- 
erty for  sale  and  all  the  money  in  circulation 
are  reciprocally  the  supply  of  and  demand  for 
each  other.  The  paramount  consideration  in 
economic  and  monetary  science  is  to  maintain 
at  all  times  as  nearly  as  possible  the  same  re- 
lation between  the  property  for  sale  and  the 
money  in  circulation,  because  if  the  volume  of 
money  is  increased  or  decreased  in  the  same 
proportion  that  property  for  sale  is  increased 
or  decreased  the  general  range  of  prices  will 
remain  substantially  stationary.  Prices  of 
particular  articles  will  rise  and  fall  according 
to  the  demand  for  and  supply  of  such  articles; 
but  when  all  the  property  for  sale  taken  to- 


24 

gether  is  considered,  the  general  level  of  prices 
is  controlled  by  the  volume  of  money  in  circu- 
lation. 

John  Stuart  Mill,  in  the  second  volume  of 
''Mill  on  Political  Economy,"  page  2,  says: 

"As  the  whole  of  the  goods  in  the  market 
"compose  the  demand  for  money,  so  the  whole 
"of  the  money  constitutes  the  demand  for 
"goods.  The  money  and  the  goods  are  seeking 
"each  other  for  the  purpose  of  being  ex- 
"changed.  They  are  reciprocally  supply  and 
"demand  to  one  another.  It  is  indifferent 
"whether,  in  characterizing  the  phenomena, 
"we  speak  of  the  demand  and  the  supply  of 
"goods  or  the  supply  and  the  demand  of 
"money.     They  are  equivalent  expressions." 

And,  again,  on  page  18,  he  says: 

"That  an  increase  of  the  quantity  of  money 
"raises  prices  and  a  diminution  lov/ers  them  is 
"the  most  elementary  proposition  in  the  the- 
"ory  of  currency,  and  without  it  we  should 
"have  no  key  to  any  of  the  others." 

Some  writers  criticise  this  doctrine,  but 
nothing  which  they  say  militates  against  the 
general  principle  that  an  increase  in  the  vol- 
ume of  money  tends  to  raise  prices  and  a  de- 


crease  to  lower  them.  They  suggest,  for  ex- 
ample, that  the  volume  of  metallic  money  in 
the  world  was  more  than  doubled  between 
1850  and  1873  by  the  gold  from  California 
and  Australia,  and  that  general  prices  rose 
only  about  twenty  per  cent.  They  do  not  make 
proper  allowance  for  the  change  in  conditions 
which  is  made  by  every  increase  in  the  vol- 
ume of  money.  General  prices  fell  between  1810 
and  1850  about  fifty  per  cent,  by  reason  of 
the  Spanish-American  wars,  which  greatly 
diminished  the  output  of  the  precious  metals, 
and  at  the  time  of  the  new  discoveries  general 
prices  were  rapidly  declining.  The  new  gold 
not  only  checked  the  decline,  but  actually  pro- 
duced rising  prices  for  nearly  a  quarter  of  a 
century.  The  reason  why  the  new  gold  did 
not  double  general  prices  was  because  the  new 
money  enabled  the  people  at  large  to  buy  more 
of  the  products  of  labor,  and  thereby  greatly 
increased  the  market  for  such  products.  The 
opportunity  thus  afforded  to  sell,  stimulated 
production  enormously  and  increased  the  sup- 
ply of  property  nearly  as  rapidly  as  the  new 
gold  added  to  the  volume  of  coin.  Thus,  new 
productions  fed  a  growing  market,  and  nearly 


26 

balanced  the  increase  of  the  volume  of  money 
which  the  new  gold  produced.  General  prices 
were  not  inflated,  but  were  substantially  sta- 
ble, with  an  upward  tendency. 

Since  the  mints  have  been  closed  to  silver 
and  one-half  of  the  supply    of    the    metallic 
money  cut  off,   there  has  been  a  general  decline 
of   prices  of  more  than  fifty  per  cent.,  show- 
ing that  general  prices  conform  to  the  volume 
of  money,  whether  it  be  increasing  or  decreas- 
ing.    An  increasing  volume  of  money  may  so 
stimulate  production  as  to  prevent  a  rise  in 
prices  corresponding  with  such  increase,  but 
every  diminution  of  the  volume  of  money  oper- 
ates with  full  force    in    depressing    general 
prices,  because  a  shrinking  volume  of   money 
reduces  the  aggregate  amount  of  money  avail- 
able for  the  purchase  of  property  and  injures 
or  destroys  the  market,  and  thereby  discour- 
ages enterprise  and  limits  production.     This 
principle  is  graphically  illustrated  in  our  prog- 
ress toward  the  gold  standard,  which  has  pro- 
duced a  fall  in  general  prices  in  twenty  years 
of  at  least  fifty  per  cent.,  and  caused  a  corres- 
ponding paralysis  in  the  productive  forces  of 
the  country.  More  than  one-half  of  the  produc- 


27 

tive  forces  of  the  United  States  are  dormant  on 
account  of  the  stagnation  caused  by  contrac- 
tion of  the  money  supply  to  reach  the  gold 
standard. 

The  fall  in  general  prices  is  admitted,  but  it 
is  sometimes  denied  that  such  fall  was  pro- 
duced by  the  demonetization  of  silver.  The 
recent  exhaustive  report  of  the  Royal  Commis- 
sion of  England  on  the  Subject  of  Agricul- 
tural Depression  was  unanimous  in  attrib- 
uting the  distress  in  that  industry  to  the  de- 
cline in  prices  of  agricultural  products,  but 
the  Commission  was  not  unanimous  as  to  the 
cause  of  such  decline.  Some  of  them  attrib- 
uted it  to  improved  appliances  in  agriculture. 
Sir  Robert  Giffen,  the  acknowledged  leader  of 
the  gold  monometallists,  deprecated  the  sug- 
gestion that  the  fall  of  prices  in  the  last 
twenty  years  is  not  mainly  attributable  to  the 
demonetization  of  silver.  He  called  attention 
to  the  fact  that  the  methods  of  production  in 
agricultural  pursuits  were  improved  more  rap- 
idly between  1850  and  1873  than  they  have 
been  since,  and  that  notwithstanding  such 
rapid  improvement  in  agricultural  implements 
prices  constantly  rose  from  18.^0  to  187.S,  since 


28 

which  time,  although  the  improvements  in 
agricultural  implements  have  been  less  im- 
portant than  previously,  prices  have  fallen 
fully  fifty  per  cent.,  which  must  be  attributed 
to  the  demonetization  of  silver.  It  is,  he  con- 
tends, a  delusion  to  attribute  the  decline  of 
general  prices  to  improved  methods  of  produc- 
tion. 

It  is  true  that  many  articles  that  were 
costly  and  regarded  as  luxuries  a  few  years 
ago  are  now  cheap,  and  rank  among  the  neces- 
saries of  life.  Skill  and  enterprise  are  con- 
stantly reducing  the  cost  of  articles  in  use  and 
making  them  cheap,  while  inventive  genius 
and  enterprise  are  constantly  creating  new 
and  costly  luxuries  which  contribute  to  the 
comfort  and  gratify  the  taste  of  those  who  can 
afford  to  have  them.  The  costly  articles  in- 
vented and  put  upon  the  market  every  year 
fully  balance,  by  the  high  prices  they  com- 
mand, the  reduction  in  prices  of  other  things. 

Justice  between  debtor  and  creditor,  and 
equal  opportunities  for  all,  are  only  attainable 
by  a  volume  of  money  which  will  always  be 
sufficient  in  quantity  to  bear  a  constant  or 
Stable  relation  between  all  the  property  for 


29 

sale  and  all  the  money  in  circulation.  The 
stability  of  general  prices,  which  the  proper 
volume  of  money  alone  can  maintain,  puts  in 
operation  the  entire  productive  forces  of  the 
country,  furnishes  labor  for  all  willing  hands, 
and  secures  prosperity  and  progress.  The  im- 
portance of  furnishing  opportunities  to  honest 
labor  cannot  be  over-estimated,  because  pro- 
duction reproduces  and  consumption  absorbs 
the  wealth  of  a  country  several  times  in  each 
decade;  and  if  production  is  not  checked  bj 
contraction,  the  surplus  over  consumption  will 
add  enormously  to  the  general  wealth  of  a^ 
nation. 


31 


BIMETALLISM. 

The  indiscriminate  use  of  gold  and  silver 
for  coinage  into  standard  money  is  the  use  of 
the  two  metals  for  the  single  purpose  of  cre- 
ating money,  and  not  for  the  purpose  of  creat- 
ing a  double  standard  of  money.     The  money 
of  one  metal  has  precisely  the  same  functions 
in  its  debt-paying  and  purchasing  power  as 
the  money  of  the  other.     It  is  a  mistake  to 
suppose  that  the  exclusive  use  of  one  metal  for 
the  time  being,  because  the  other  is  not  equally 
available,  creates  a  single  standard  of  gold  or 
of  silver.     The  right  to  coin  and  use  the  metal 
which  is  cheapest,  at  the  option  of  the  debtor, 
is  the  cardinal  result  of  bimetallism.  There  is 
no  more  difference  in   the  functions   of    the 
money  that  different  metals  produce  than  there 
would  be  in  the  functions  of  steam,  whether 
generated  by  wood  or  coal.     In   the  former 
<ase  it  is  one  money;    in  the  latter  it  is  one 
steam. 

Parity  between  the  two  metals  has  nothing 
to  do  with  bimetallism,  but  parity  between 
the  volume  of  money  in  circulation  and    the 


32 

property  for  sale  is  of  paramount  importance. 
As  long  as  the  suppl}'  of  money  and  the  prop- 
erty for  sale  bear  the  same  ratio  to  each  other, 
the  parity  which  equity  and  justice  require  is 
preserved.  The  coincidence  of  parity  between 
the  two  metals  during  all  the  ages  previous  to 
1873,  when  both  had  unlimited  coinage,  has  led 
people  to  suppose  that  parity  is  a  condition 
precedent  to  bimetallism  and  not  a  condition 
subsequent,  produced  by  equal  coinage  laws 
for  both  metals.  The  reason  why  bimetallism 
produces  parity  is  very  plain.  If  a  certain 
amount  of  money  can  be  coined  out  of  a  given 
quantity  of  silver,  and  a  like  amount  can  be 
coined  out  of  a  given  quantity  of  gold,  such 
given  quantity  of  silver  and  such  given  quan- 
tity of  gold  each  represents  the  same  amount 
of  coin,  and  there  can  be  no  difference  what- 
ever in  their  value. 

If  it  is  more  convenient  to  obtain  a  dollar 
by  the  coinage  of  25.8  grains  of  standard  gold 
than  by  the  coinage  of  412|  grains  of  standard 
silver,  gold  will  be  used  for  that  purpose;  and 
if  a  dollar  can  be  more  readily  obtained  by  the 
coinage  of  silver,  then  silver  will  be  used  for 
that  purpose.    When  either  of  the  two  metals 


33 

becomes  dearer  than  the  other,  the  entire  de- 
mand falls  on  the  cheaper  metal  until  the  in- 
creased demand  raises  the  value  of  that  metal 
equal  to  or  in  excess  of  the  value  of  the  other, 
the  cheaper  metal  being  always  in  de- 
mand in  preference  to  the  dearer.  Their  rela 
tive  value  is  thereby  automatically  equalized. 

The  relative  production  of  the  two  metals 
for  the  last  four  hundreds  years  illustrates  the 
fact  that  under  the  equal  coinage  of  both  their 
relative  quantities  have  nothing  to  do  with 
their  parity.  From  the  discovery  of  America 
to  1803,  according  to  Von  Humboldt,  there 
were  forty-four  ounces  of  silver  produced  to 
every  ounce  of  gold,  and  at  no  time  during  that 
v/hole  period  would  an  ounce  of  gold  buy  more 
than  15^  ounces  of  silver.  From  1803  to  1850 
there  were  about  thirty-five  ounces  of  silver 
to  one  ounce  of  gold  produced,  and  still  an 
ounce  of  gold  would  buy  just  15|  ounces  of 
silver,  no  more,  no  less.  From  1850  to  1873 
there  were  only  six  ounces  of  silver  to  one 
ounce  of  gold  produced;  and  yet  an  ounce  of 
gold  continued  to  buy  15^  ounces  of  silver. 
At  the  last  named  date  the  United  States  and 
various  European  countries  commenced  clos- 


34 

ing  their  mints  to  silver,  until  the  right  of  the 
depositors  of  silver  bullion  to  have  it  coined 
into  money  was  denied  by  the  entire  western 
world. 

Since  1873  the  production  of  silver  bullion 
has  been  a  little  less  than  sixteen  ounces  to 
one  ounce  of  gold,  while  an  ounce  of  gold  will 
now  buy  between  thirty-two  and  thirty-three 
ounces  of  silver.  It  will  be  observed  that  it 
was  the  option  of  the  debtor  to  have  either 
metal  coined  for  his  use  in  payment  of  debts 
which  maintained  the  parity.  It  will  also  be 
observed  that  it  was  the  closing  of  the  mints 
which  took  away  that  option  and  transferred 
the  coinage  demand,  which  both  metals  had 
supplied,  to  gold  alone  which  has  created  the 
present  disparity. 

The  only  parity  which  interests  mankind  is 
that  parity  which  exists  between  money  and 
commodities.  The  parity  between  silver  and 
commodities  has  remained  substantially  sta- 
tionary. Four  hundred  and  twelve-and-a-half 
grains  of  standard  silver  will  buy  very  nearly 
as  much  of  all  things  in  general  to-day  as  412^ 
grains  of  standard  silver  or  25.8  grains  of 
standard  gold  would  have  bought  twenty-five 


35 

years  ago,  but  25.8  grains  of  standard  gold 
to-day  will  buy  more  than  twice  as  much  prop- 
erty in  general  as  they  would  have  bought  a 
quarter  of  a  century  ago.  The  disparity  be- 
tween money  and  property,  created  by  the  dis- 
use of  silver,  has  depreciated  all  kinds  of  prop- 
erty, caused  stagnation  in  business,  and  pro- 
duced universal  distress.  It  is  the  greatest 
calamity  that  has  afflicted  the  human  race  for 
more  than  five  hundred  years.  The  bondhold- 
ers, annuitants  and  others  enjoying  fixed  in- 
comes are  being  unjustly  benefited  by  this 
monetary  revolution  at  the  expense  of  all 
other  classes  of  society. 

Thus  it  is  shown  that  open  mints  for  the  un- 
limited coinage  of  all  the  gold  and  all  the  sil- 
ver brought  to  them  to  be  converted  into 
money  without  limitation  or  discrimination 
against  either,  and  the  right  of  the  debtor  to 
pay  his  debts  and  taxes  in  the  coin  of  either 
metal  at  his  option,  is  bimetallism. 

In  preceding  pages  it  was  shown  that 
money  is  the  creation  of  law,  and  that  every 
sovereign  state  may  create  full  legal-tender 
money  by  the  use  of  metal,  paper,  or  any  other 
suitable  material  upon  which  to  stamp  or  print 


36 

the  sovereign  mandate.  It  may  be  asked,  if 
paper  will  answer  the  same  purpose  as  the 
precious  metals,  why  not  use  paper  and  avoid 
the  cost  of  mining  for  gold  and  silver?  The 
reply  is,  that  the  precious  metals,  so  long  as 
the  mines  are  reasonably  productive,  furnish  a 
more  reliable,  stable  and  certain  method  of 
regulating  the  volume  of  money  than  any  rule 
or  theory  advanced  for  limiting  or  regulating 
such  volume  hj  legislative  enactment.  Gold 
and  silver  have  been  used  as  money  metals 
since  prehistoric  times.  When  the  mines  weie 
productive,  ancient  civilization  developed;  ai'.tl 
when  the  mines  v/ere  exhausted  barbarism  fol- 
lowed the  shrinking  volume  of  money  with  as 
much  certainty  as  night  followed  day. 

In  the  zenith  of  her  power  Rome  had,  ac- 
cording to  the  estimate  of  W.  Jacob,  F.  R.  S., 
and  the  historian  Gibbon,  about  $1,800,000,000 
of  gold  and  silver  coin  in  actual  circulation. 
The  mines  became  exhausted,  and  the  produc- 
tion of  the  precious  metals  for  about  fourteen 
hundred  years  was  very  limited.  The  supply  of 
gold  and  silver  in  the  country  which  had  coni- 
I}rised  the  Roman  Empire  vras  reduced  during 
that  long  money  famine  from  eig -teen  hundred 


37 

millions  to  less  than  one  hundred  and  fifty- 
millions,  and  the  descendants  of  the  warriors 
and  statesmen  of  the  great  and  glorious  civili- 
zation which  was  strangled  by  fourteen  hun- 
dred years  of  contraction  became  feudal  slaves 
and  were  sold  with  the  land. 

Modern   civilization   had   its   origin   m   tue 
discoveries  of  gold  and  silver  in  Mexico  and 
South  America.     The  supply  of  the  two  met- 
als was  continuous  for  about  three  hundred 
years,  and  a  new  civilization  was  created.     At 
the  beginning  of  the  present  century  the  Span- 
ish-American wars  created  a  money  famine  by 
interrupting    mining    in    Mexico    and    South 
America.     From  1810  to  1850  all  Europe  was 
disturbed  by  anarchy  and  civil  war,  and  af- 
flicted  by   poverty   and    want.      The   United 
States  was  relieved  to  a  great  extent  from  the 
horrors  of  the  money  famine,  in  the  first  half 
of  the  present  century,  by  the  great  Missis- 
sippi Valley,  in  which  our  generous  Govern- 
ment gave  a  farm  to  every  man  who  would 
take,   occupy,   and   improve   it.       Millions   of 
hardy  pioneers  from  Europe  sought  homes  in 
the  marvelous  valley  of  the  West,    bringing 
with  them  their  money  and  their  belongings, 


38 

and  by  tbeir  labor  and  enterprise  added  enor- 
mously to  the  prosperity  of  the  United  States, 
and  mitigated  in  this  country  the  miseries  of 
the  money  famine  which  sorely  afflicted  the 
people  of  the  Old  World. 

The  gold  from  California  and  xVustralia 
marked  a  new  era  in  the  progress  of  civiliza- 
tion, set  in  motion  the  productive  agencies  of 
the  human  race,  revived  commerce,  stimulated 
learning  and  science,  inspired  invention,  and 
was  the  means  of  accumulating  greater  wealth 
in  twenty-five  years  than  in  any  preceding 
century.  The  automatic  rule  of  allowing  the 
volume  of  the  circulating  medium  to  be  regu- 
lated by  the  supply  of  the  two  metals  worked 
to  perfection.  AYhen  there  Vvas  a  slight  de- 
crease in  the  output  of  gold,  the  discovery  of 
the  great  Comstock  lode  revived  silver  mining 
throughout  the  world,  and  if  the  product  of 
both  metals  had  been  used  according  to  the 
laws  of  the  better  days  of  the  Republic  and 
the  universal  custom  for  thousands  of  years, 
there  would  have  been  no  shrinkage  of  the  vol- 
ume of  money,  no  increase  in  the  purchasing 
power  of  dollars,  or  decrease  in  the  value  of 
property,  and  the  progress  and  prosperity  of 


39 

the  wonderful  period  of  human  advancement 
between  1850  and  1873  would  have  been  in- 
definitely continued. 

The  power  of  the  Government  to  create 
money  by  the  upe  of  paper  is  undoubted,  but 
the  experiment  of  a  proper  limitation  of  the 
volume  of  money  by  human  laws,  without  the 
automatic  rule  of  regulating  that  volume  by 
Nature's  supply'  of  the  two  metals,  is  yet  un- 
tried. The  apprehension  that  an  undertaking 
by  the  Government  to  substitute  legislation  for 
the  automatic  rule  of  regulating  the  volume  of 
money  might  result  in  ruinous  inflation  or  de- 
structive contraction,  is  at  present  an  insur- 
mountable obstacle  to  dispensing  with  the  use 
of  gold  and  silver.  The  abandonment  of  the 
automatic  rule  by  the  demonetization  of  silver 
has  created  a  necessity  for  further  action.  If 
only  gold  is  to  be  used,  the  certainty  in  such 
case  of  re-establishing  feudal  slavery  in  Eu- 
rope and  America  and  destroying  every  ves- 
tige of  free  institutions,  ought  to  induce  all 
intelligent  and  patriotic  citizens  to  make  a 
desperate  effort  to  free  themselves  from  the 
chains  of  financial  bondage.  If  silver  is  de- 
prived of  its  money  functions,  gold  must  share 


40 

the  same  fate,  and  paper  must  be  substituted 
for  both  to  rescue  civilization  from  decay. 

The  experiment  of  abandoning  the  precious 
metals  for  use  as  money  is  so  full  of  doubt  and 
danger,  and  the  gold  standard  is  such  an  omi- 
nous precursor  of  ruin  and  destruction,  that  an 
intelligent  people  fear  to  adopt  either  alterna- 
tive. This  momentous  question  is  brought  to 
the  attention  of  the  people  by  the  grinding 
effect  of  continually  falling  prices.  They  com- 
pare the  prosperity  their  ancestors  enjoyed 
While  the  mints  were  open  to  both  metals,  and 
the  opportunities  which  then  existed  for  ac- 
quiring comfort  and  independence,  with  the 
bankruptcy,  want,  and  poverty  of  all  who  are 
now  so  unfortunate  as  to  depend  upon  produc- 
tive enterprises  for  a  livelihood.  They  are 
certain  of  relief  if  they  reverse  the  legislation 
which  caused  their  calamities,  and  re-enact  the 
coinage  laws  of  Jefferson  and  Hamilton.  They 
must  take  the  Constitution  and  the  uniform 
custom  for  thousands  of  years  for  their  guide 
if  they  would  find  the  way  to  relief. 


4:1 


RATIO. 

The  qnantity  of  gold  compared  with  the 
quantity  of  silver  used  to  make  a  given  amount 
of  money  is  called  the  ratio  between  the  two 
metals.  This  ratio  is  purely  arbitrary-  and  de- 
pends entirely  upon  the  discretion  of  the  law- 
makers. It  is  to  be  remembered  that  the  ag- 
gregate weight  of  the  silver  in  the  world  is 
about  15^  times  as  much  as  the  aggregate 
weight  of  the  gold  in  the  world.  This  singular 
coincidence  has  led  many  to  suppose  that  the 
prevailing  ratios  of  the  various  nations  of  the 
civilized  world  are  ordained  by  nature.  Bi- 
metallists  do  not  base  their  insistence  that  the 
mints  of  the  United  States  ought  to  be  open 
to  the  coinage  of  gold  and  silver  at  the  ratio 
of  16  to  1  upon  any  natural  phenomena.  They 
are  in  favor  of  16  to  1  because  it  is  the  estab- 
lished ratio  now  in  existence  under  the  laws 
of  this  country,  and  upon  the  faith  of  which 
ratio  the  obligations  of  the  Government  are 
predicated.  The  act  of  July  14,  1870,  under 
which  every  bond  now  outstanding  has  been 
issued,  provides  that  the  public  debt  incurred 


42 

under  the  act  shall  be  paid  iu  coiu  of  the 
standard  value  of  that  date.  A  change  of  ra- 
tio would  be  in  derogation  of  every  contract 
now  outstanding  between  the  Government 
and  its  creditors. 

No  good  reason  earn  be  given  for  a  change 
which  would  require  more  silver  to  be  put  in 
the  silver  dollar  than  it  now  contains.  The 
fact  that  there  are  about  |;4,000.000,000  of 
silver  coin  now  doing  duty  as  money  at  a 
ratio  approximating  15^  to  1  must  be  duly 
considered.  If  the  commercial  value  of  silver 
bullion,  which  is  now  denied  the  right  of  mint- 
age, should  be  made  the  basis  of  a  ratio,  it 
would  require  all  the  silver  coin  in  the  world 
to  be  recoined  to  correspond  with  the  new  ra- 
tio, which  would  contract  the  world's  money 
not  less  than  two  thousand  millions.  Such 
contraction  would  be  of  the  same  vicious  char- 
acter as  the  original  demonetization  of  silver. 
It  would  rob  the  debtor  for  the  benefit  of  the 
creditor,  further  paralyze  enterprise,  and  in- 
crease the  existing  poverty  and  distress  in  the 
world. 

It  is  constantly  objected  by  the  gold  raono- 
metallists  that  the  United  States  alone  cannot 


43 

maintain     the     parity     between     the     two 
metals     at     the     ratio     of     16     to     1,     and 
that,    therefore,    that    ratio    must    be  aban- 
doned.      The    Government     has    nothing    to 
do    with    parity    other   than    to    make    equal 
laws.      Parity  between  the  diiferent  kinds  of 
money  in  circulation  does  not  depend  upon  the 
cost  of  the  material  of  which  they  are  made, 
but  depends  exclusively    upon    their    relative 
functions.     Every  full  legal-tender  dollar  will 
perform  the  same  service,  and  is  just  as  val- 
uable as  every  other  full  legal-tender  dollar  in 
circulation.     Nothing  can  make  a  difference  in 
the  value  of  full  legal-tender  money  but  a  dis- 
crimination in  favor  of  the  coin  of  one  metal 
and  against  the  coin  of  the  other.  If  one  kind  of 
money  has  useful  functions  v,'hich  another  kind 
of  money  does  not  possess,  its  value  might,  and 
almost  certainly  would,  be  greater  than  the 
money  less  favored  by  law. 

The  suggestion  that  the  silver  dollar  would 
be  a  50-cent  dollar  under  free  coinage  at  the 
ratio  of  16  to  1  is  erroneous.  The  United 
States  has  issued  Treasury  notes  from  time  to 
time  since  1813  and  made  them  receivable  for 
all  public  dues.       Every  one  of  such  notes, 


44 

which  was  receivable  for  Government  dues, 
has  at  all  times  been  at  par  with  coin.  Coin 
and  Government  notes  receivable  for  Govern- 
ment dues  never  parted  company  until  a  pro- 
vision was  inserted  in  the  legal-tender  act 
repudiating  the  greenbacks  to  the  extent  of  re- 
fusing to  receive  them  for  duties  on  imports 
and  interest  on  the  public  debt. 

There  are  nearly  five  hundred  million  stand- 
ard silver  dollars  doing  duty  as  money  on  a 
par  with  gold,  either  in  actual  circulation  or  in 
circulation  by  their  representatives,  silver  cer- 
tificates. It  is  stated  that  this  is  because  the 
amount  of  such  dollars  does  not  exceed  five 
hundred  millions.  Attention  is  called  to  what 
Secretary  of  the  Treasury  Sherman,  the  father 
of  the  gold  standard,  said  on  this  subject  in 
his  report  of  1879,  page  14: 

"The  total  amount  of  silver  dollars  coined 
to  November  1,  1S79,  under  the  act  of  Febru- 
ary 28,  1878,  was  |45,206,200,  of  which  |13,- 
002,842  was  in  circulation,  and  the  remainder, 
$32,203,358,  in  the  Treasury  at  that  time.  No 
effort  has  been  spared  to  put  this  coin  in  cir- 
culation. Owing  to  its  limited  coinage  it  has 
been  kept  at  par;  but  its  free  coinage  would 
soon  reduce  its  current  value  to  its  bullion 
value,  and  thus  establish  a  single  silver  stand- 
ard." 


45 

The  purchase  and  coinage  of  silver  bullion 
into  standard  dollars  continued  for  about  four- 
teen years  after  this  declaration  of  Secretary 
Sherman,  and  the  amount  of  silver  coin  was 
increased  more  than  ten-fold  without  the 
slightest  depreciation  in  the  purchasing  power 
of  the  silver  dollar.  This  statement  of  Secre- 
tary Sherman  is  cited  because  it  is  one  of  the 
stock  arguments  of  the  advocates  of  the  gold 
standard,  which,  like  all  their  other  conten- 
tions, is  in  direct  opposition  to  existing  facts. 

Mr.  Cleveland,  after  his  election  and  before 
his  inauguration,  on  February  24,  1885,  ad- 
dressed a  letter  to  Hon.  A.  J.  Warner  and 
others,  then  Representatives  in  Congress,  re- 
questing an  immediate  repeal  of  the  Bland- 
Allison  act  providing  for  the  purchase  of  not 
less  than  two  million  nor  more  than  four  mill- 
ion dollars'  worth  of  silver  bullion  per  month 
to  be  coined  into  standard  dollars.  In  that 
letter,  among  other  things,  he  said: 

"I  hope  that  you  concur  with  me  and  with 
the  great  majority  of  our  fellow-citizens  in 
deeming  it  most  desirable  at  the  present  junc- 
ture to  maintain  and  continue  in  use  the  mass 
of  our  gold  coin  as  well  as  the  mass  of  silver 
already  coined.  This  is  possible  by  a  present 


46 

suspension  of  the  purchase  and  coinage  of  sil- 
ver. I  am  not  aware  that  by  any  other  method 
it  is  possible." 

The  Bland-Allison  act  remained  on  the  stat- 
ute book,  and  the  purchase  and  coinage  of  sil- 
ver continued  under  it  for  more  than  five  years 
before  it  was  repealed,  and  the  so-called  Sher- 
man act  which  provided  for  the  purchase  and 
use  for  the  purpose  of  money  of  not  less  than 
four  and  a  half  million  ounces  of  silver  bullion 
each  month  was  substituted  therefor.  The 
amount  of  silver  coin  was  much  more  than 
doubled  after  Mr.  Cleveland  declared  that 
there  was  no  possible  way  of  maintaining  and 
continuing  in  use  our  gold  coin  except  by  sus- 
pending the  purchase  and  coinage  of  silver. 
Predictions  of  all  the  leading  goldites  in  the 
land  to  the  same  effect  might  be  cited.  They 
told  the  people  every  day  while  the  United 
States  was  purchasing  and  coining  silver  that 
the  limit  had  been  reached,  and  that  if  any 
more  silver  were  coined  the  value  of  the  silver 
dollar  would  fall  to  the  current  price  of  silver 
bullion.  The  fact  that  they  have  made  these 
false  predictions  for  more  than  twenty  years, 
and  continue  to  make  them,  must  be  attributed 


47 

to  their  ignorance  or  to  their  desire  to  deceive 
the  public. 

There  is  another  grossly  absurd  dogma  which 
goldites  constantly  preach  and  teach.  This 
also  appears  in  the  Cleveland  letter,  which 
is  said  to  have  been  the  first  financial  docu- 
ment ever  written  for  Mr.  Cleveland  to  sign. 
Mr.  Cleveland  argued  in  that  letter  that  the 
Bland  act  must  be  repealed,  or  gold  would  be 
withdrawn,  the  volume  of  money  unprecedent- 
edly  contracted,  and  the  wages  of  labor  scaled 
down  by  their  payment  in  depreciated  money. 
To  avoid  doing  him  an  injustice  the  precise 
language  he  used  in  predicting  the  results  of 
the  refusal  to  repeal  the  Bland  act  will  be 
quoted.     He  said: 

"Gold  would  be  withdrawn  to  its  hoarding 
places,  and  an  unprecedented  contraction  in 
the  actual  volume  of  our  currency  would  speed- 
ily take  place.  Saddest  of  all,  in  every  work- 
shop, mill,  factory,  store,  and  on  every  rail- 
road and  farm,  the  wages  of  labor,  already 
depressed,  would  suffer  still  further  depression 
by  a  scaling  down  of  the  purchasing  power 
of  every  so-called  dollar  paid  into  the  hands 
of  toil." 

"Unprecedented  contraction  in  the  actual 
volume  of  our  currency"  would  hardly  scale 


48 

down  the  purchasing"  power  of  the  dollar.  If 
contraction  does  not  increase  the  purchasing 
power  of  the  dollar,  what  does? 

Tlie  hallucination  which  would  induce  a 
President  of  the  United  States  to  believe  that 
unprecedented  contraction,  creating  dear 
money,  and  the  robbery  of  thc^  laborer  by 
cheap  money  in  circulation,  could  occur  at  one 
and  the  same  time,  accounts  for  many  of  the 
absurd  vagaries  of  the  advocates  of  so-called 
"sound  money."  But  strange  as  it  may  ap- 
pear, this  absurd  paradox  has  been  iterated 
and  reiterated  by  the  so-called  economists  of 
our  colleges,  the  financial  mountebanks  of  the 
commercial  press,  and  the  controllable  politi- 
cians for  the  last  twenty  years. 

These  examples  of  the  false  predictions  of 
the  goldites  have  been  cited  to  show  how  little 
reliance  can  be  placed  upon  their  arguments 
against  the  unlimited  coinage  of  silver  at  the 
ratio  of  16  to  1,  because  the  stock  argument 
they  always  use,  when  driven  to  the  wall  by 
the  force  of  well-known  facts,  is  that  the  coin- 
age ratio  must  be  changed  to  correspond  with 
the  commercial  ratio  of  the  two  metals.  They 
seem  entirelv  oblivions  of  the  fact  that  under 


49 

equal  coinage  the  commercial  ratio  followed 
the  coinage  ratio  without  material  variation 
for  thousands  of  years  previous  to  1873. 
While  the  mints  were  open  no  one  would  sell 
silver  bullion  or  gold  bullion  for  a  less 
amount  of  money  than  it  would  produce  at  the 
mint.  It  was  impossible  for  either  silver  or 
gold  to  decline  in  price  below  the  coinage 
value,  because  there  was  an  unlimited  market 
for  it  at  that  price.  Nor  could  the  commercial 
price  of  either  of  the  metals  rise  to  any  appre- 
ciable extent  above  the  coinage  value,  because 
in  that  case  its  excessive  price  would  be  pro- 
hibitory and  the  demand  would  fall  on  the 
cheaper  metal  until  the  differing  commercial 
prices  of  the  two  metals  became  equalized. 

The  mode  adopted  by  the  goldites  for  the 
ostensible  purpose  of  restoring  the  parity  be- 
tween the  two  metals  is  like  going  down  a 
mountain  to  reach  the  summit.  It  was  the 
Don-use  of  silver  which  reduced  the  demand 
and  created  the  disparity  between  the  bullion 
value  of  the  two  metals.  The  argument  that 
the  non-use  of  silver  and  the  unlimited  u»e  of 
gold  sustains  paiity  is  a  transparent  fallacy 
and  ought  not  to  mislead  the  people. 


50 

The  slightest  reflection  will  show  that  the 
non-use  of  a  commodity  destroys  the  demand 
and  reduces  the  price.  Would  the  price  of 
wheat  be  advanced  if  everybody  should  stop 
eating  wheat  bread?  Yet  the  goldites  say 
that  the  way  to  raise  the  price  of  silver  to  a 
parity  with  gold  is  by  the  utter  disuse  of  silver 
and  the  use  of  gold  alone. 

The  Harrison-Cleveland  combination  ex- 
cused the  breach  of  trust  of  which  they  were 
guilty  in  refusing  to  pay  out  silver  according 
to  law  and  the  contract  with  the  bondholders, 
by  contending  that  such  use  of  silver  would  de- 
stroy the  parity,  and  that  the  only  way  to  main- 
tain the  i^arity  is  to  buy  gold  at  any  price  and 
pay  it  to  the  Government  creditor,  and  keep 
the  silver  in  the  vaults  of  the  Treasury.  They 
claim  to  have  discovered  that  the  unlimited 
use  of  gold  and  the  non-use  of  silver  will  make 
an  equal  demand  for  both  and  maintain  the 
parity.  If  they  were  indicted  as  private  par- 
ties would  be  for  breach  of  trust  in  surrender- 
ing the  option  of  their  employers,  as  the  Gov- 
ernment's option  was  surrendered  to  the  bond- 
holders, would  a  jury  acquit  them  on  such  an 
absurd  pretext? 


51 


MOTIVE   FOR  DEMONETIZATION. 

The  motive  for  the  monetary  revolution  of 
1873  was  the  greed  of  the  owners  of  bonds  and 
other  sources  of  fixed  incomes.  The  space 
allotted  in  this  little  volume  does  not  permit  a 
detailed  account  of  the  various  expedients 
adopted  to  secure  the  demonetization  of  silver. 
It  is  sufficient  for  the  present  purpose  to  state 
(and  it  cannot  be  successfully  contradicted), 
that  the  coinage  of  silver  was  suspended  with- 
out the  knowledge  or  consent  of  the  American 
people,  and  without  the  knowledge  of  the  peo- 
ple of  any  other  civilized  country.  The  scheme 
was  devised  and  the  legislation  procured  exclu- 
sively in  the  interest  of  those  who  were  to  be 
benefited  by  increasing  the  purchasing  power 
of  money  and  reducing  the  price  of  property. 
The  disaster  to  productive  enterprises  and  the 
injustice  to  the  debtor  were  not  considered. 
Blind  greed  kept  from  the  view  of  the  inter- 
ested parties  everything  but  the  advantages 
they  would  gain  by  the  measure. 

An  increase  in  the  purchasing  power  of 
money  in  cash  transactions  is  comparatively 


52 

unimportant;  but  when  payment  is  deferred, 
or  money  is  borrowed  to  be  returned  at  a  fu- 
ture time,  injustice  will  be  done  unless  the 
money  in  circulation  bears  the  same  relation 
to  the  property  for  sale  at  the  time  of  payment 
as  it  did  at  the  time  the  obligation  was  cre- 
ated. More  injustice  is  done  by  dishonest 
changes  in  the  measurement  of  time  contracts 
than  by  all  other  methods  by  which  the  earn- 
ings of  the  masses  are  transferred  to  the 
classes  without  consideration.  Every  other 
contrivance  whereby  the  cunning  of  the  few 
takes  advantage  of  the  many  sinks  into  insig- 
nificance when  compared  with  the  wholesale 
spoliation  which  is  practised  through  the  ma- 
nipulation of  the  volume  of  money  in  order  to 
change  the  value  of  debts. 

The  manipulators  who  make  war  on  the  peo- 
ple by  contraction  may  be  likened  to  the  in- 
vaders of  the  ancient  empires  where  cultiva- 
tion could  only  be  prosecuted  by  irrigation. 
As  the  legions  of  Greece  and  Rome,  each  in 
turn,  desolated  the  empires  of  the  East  by  de- 
stroying the  reservoirs,  canals  and  aqueducts 
which  watered  and  fertilized  their  fields,  while 
pillaging  and  robbing  the  people,  so  they  des- 


53 

troy  the  instrument  of  future  production  who 
reduce  the  volume  of  money  to  increase  the 
obligation  of  contracts. 

In  1873  the  supply  of  legal-tender  money  in 
the  world  consisted  of  all  the  gold  and  silver 
brought  to  the  mints  for  coinage,  and  more 
than  $100,000,000,000  of  obligations  were 
then  in  existence  predicated  upon  such 
supply.  The  demonetization  of  silver  cut 
off  half  the  supply,  while  the  demand, 
by  the  growth  of  population  and  busi- 
ness, was  constantly  increasing.  The  de- 
mand is  now  more  than  double  that  of  twenty- 
five  years  ago,  as  compared  with  the  supply  of 
coin,  and  consequently  the  purchasing  power 
of  each  dollar  has  been  enhanced  more  than 
100  per  cent.  Much  the  larger  part  of  the 
world's  indebtedness  existing  when  silver  was 
demonetiezd  is  still  unpaid.  While  some  of  it 
may  have  been  liquidated,  the  aggregate  has 
been  largely  increased  by  adding  interest  to 
principal.  The  national  debts  of  the  world 
which,  twenty-five  years  ago,  were  about  $22,- 
000,000,000,  now  aggregate  about  |30,000,000,- 
000.  It  cannot  be  denied  that  the  national 
debts  and  all  other  indebtedness  which  existed 


54 

at  the  time  silver  was  demonetized  were  predi- 
cated upon  the  quantity  of  money  furnished  by 
gold  and  silver,  and  that  the  debtor  had  the 
option  to  pay  in  money  of  either  metal. 

The  suggestion  that  a  large  amount  of  the 
present  indebtedness  of  the  civilized  world  was 
contracted  on  a  gold  basis  is  a  mistake.  We 
have  not  reached  a  gold  basis,  and  will  not 
until  the  $3,600,000,000  of  full  legal-tender  sil- 
ver shall  have  been  deprived  of  its  money 
functions  and  the  business  of  the  world  re- 
duced to  the  narrow  basis  of  gold  alone.  While 
the  approach  to  the  single  gold  standard  con- 
tinues, the  so-called  gold  basis  will  be  con- 
stantly changing  and  always  in  the  same  direc- 
tion. The  conversion  of  Austrian  silver  bonds 
into  gold  bonds  during  Cleveland's  adminis- 
tration greatly  enhanced  the  purchasing  jjower 
of  gold  by  increasing  the  demand.  The  adop- 
tion of  the  gold  standard  by  Japan  had  the 
3me  effect.  It  is  now  seriously  proposed  to 
buy  gold  enough  to  put  India  on  a  gold  basis. 
India  has  about  $1,000,000,000  of  full  legal- 
tender  silver.  The  amount  of  gold  which 
would  be  required  to  make  the  change  in  India 
alone  would  consume  the  entire  output  of  gold 


55 

available  for  coinage  for  more  than  a  decade. 
The  grinding  process  of  requiring  one  nation 
after  another  to  sell  its  silver  coin  and  buy 
gold  coin  keeps  the  purchasing  power  of  gold 
constantly  increasing  and  the  price  of  prop- 
erty constantly  falling. 

When  we  consider  the  world's  indebtedness 
of  every  kind,  public  and  private,  now  esti- 
mated at  about  $150,000,000,000,  the  tremen- 
dous loss  to  the  debtor  and  gain  to  the  creditor 
by  the  constant  increase  of  the  purchasing 
power  of  money,  surpasses  the  wildest  imagi- 
nation. It  is  difficult  to  distinguish  the  moral 
culpability  of  tampering  with  the  volume  of 
money,  by  which  time  contracts  are  measured, 
from  the  guilt  of  forgery  by  changing  the  fig- 
ures on  bank  checks.  Why  should  the  former 
offence  be  called  honest  while  the  latter  is  de- 
nounced as  a  felony? 

If  the  dealers  in  gold  are  utterly  oblivious 
of  their  own  wrong-doing,  or  so  thoroughly  ab- 
sorbed by  avarice  that  the  suffering  of  the 
masses  are  wholly  immaterial  to  them,  they 
will  do  well  to  reflect  upon  the  possible  retribu- 
tion in  store  for  them  and  their  posterity.  Se- 
curity for  property  rests  on  justice  and  equal- 


56 

itj.  The  injustice  of  changing  the  measure  of 
time  contracts  by  a  change  in  the  money 
standard  is  so  flagrant,  so  far-reaching,  so  de- 
structive of  the  peace  and  happiness  of  the 
great  mass  of  the  human  race  that  it  weakens 
confidence,  creates  envy  and  distrust,  embit- 
ters the  masses  against  the  classes,  disturbs 
the  foundations  of  society,  and  threatens  the 
stability  of  governmental  authority. 


57 


MONEY  IS  NATIONAL. 

The  expressions  "money  good  all  over  the 
world,"  "the  best  money  of  the  world,"  and  the 
like,  emanating  from  leading  statesmen  and 
financiers,  are  misleading.  There  is  no  money 
good  all  over  the  world.  No  money  can  pos- 
sess money  functions  outside  of  the  country  of 
its  creation,  unless  they  are  conferred  upon  it 
by  the  local  law  of  the  country  to  which  it  is 
taken.  We  recall  but  a  single  instance  where 
an  attempt  has  been  made  to  create  interna- 
tional money.  The  so-called  Latin  Union, 
consisting  of  France,  Greece,  Italy,  Belgium, 
and  Switzerland,  entered  into  a  treaty  in  1865 
whereby  each  of  these  governments  was  bound 
to  treat  the  coinage  of  all  the  others  as  full 
legal-tender  within  its  jurisdiction.  It  re- 
quired the  law  of  each  of  these  governments, 
or  a  treaty  having  the  force  of  local  law,  to 
make  creditors  receive  this  money  outside  of 
the  country  in  which  it  was  coined. 

It  is  not  unusual,  however,  for  a  government 
to  create  money  out  of  the  coins  of  other  na- 
tions by  making  th«m  legal-tender.     This  was 


58 

done  by  the  United  States  in  1793,  by  the  act 
which  made  all  the  foreign  gold  and  silver 
coins  legal-tender  in  this  country,  according  to 
their  weight  and  fineness.  In  consequence  of 
that  act  the  great  mass  of  the  silver  coin  cur- 
rent in  the  United  States  previous  to  1857  was 
foreign  coin.  Spanish-American  countries 
from  which  we  obtained  our  silver  charged  an 
export  duty  on  silver  bullion  and  made  it  an 
inducement  for  the  owners  of  it  to  take  it  to 
their  mints  before  exporting  it  to  the  United 
States;  consequently,  most  of  the  silver  re- 
ceived in  the  United  States  was  in  the  shape  of 
coin.  The  coinage  of  the  United  States  was 
principally  confined  to  the  recoinage  of  worn- 
out  or  mutilated  foreign  coins.  In  February, 
1857,  Congress  passed  an  act  declaring  that 
foreign  coins  should  no  longer  be  a  legal- 
tender  in  this  country.  This  deprived  the 
banks  of  coin  for  the  redemption  of  their 
notes,  and  was  the  principal  cause  of  the  panio 
of  1857. 

It  is  seen  that  the  foreign  coins  which  were 
once  current  in  this  country  obtained  their 
money  function  from  the  laws  of  the  United 
States,  and  not  from  the  laws  of  any  foreign 


59 

country.  The  suggestion  that  one  country 
can,  by  its  laws,  make  money  which  will  be 
good,  as  money,  in  any  other  country,  ought 
not  to  require  contradiction,  and  would  not  be 
noticed  if  the  assertion  that  we  must  have 
"money  good  all  over  the  world"  did  not  imply- 
that  our  financial  legislation  must  be  in  con- 
formity with  the  legislation  of  other  countries, 
which,  if  desirable,  would  be  impracticable  be- 
cause the  laws  of  nations  are  as  diverse  and 
conflicting  on  the  money  question  as  on  any 
other  matter  of  municipal  legislation.  Neither 
the  gold  coin  nor  the  silver  coin  of  the  United 
States  is  money  outside  of  the  jurisdiction  of 
this  country. 

It  is  a  mistake  to  suppose  that  trade  and 
commerce  are  carried  on  between  countries  by 
the  use  of  money  as  such.  Money  outside  of 
the  jurisdiction  creating  it  is  as  much  a  com- 
modity as  wheat,  pork,  or  beef.  Gold  and 
silver,  whether  coined  or  uncoined,  are  sold  in 
foreign  countries  by  weight.  The  value  of 
money,  as  such,  all  over  the  world  is  regulated 
by  its  purchasing  power  in  the  country  cre- 
ating it,  less  the  difference  of  exchange.  If  it 
is  stamped  or  printed  on  a  material  in  great 


60 

demand  in  other  countries  for  coinage  into 
money,  such  coinage  demand  may  affect  the 
price  of  the  bullion  in  foreign  markets  as  a 
commodity.  The  mints  of  the  commercial 
world  being  generally  open  to  convert  gold 
into  coin  without  charge  for  mintage,  the  price 
of  gold  bullion  in  foreign  markets  is  the  same 
as  its  coinage  value.  Money  made  of  silver 
or  paper  must  be  sent  back  to  the  country 
creating  it,  where  it  will  pay  debts  and  taxes, 
and,  consequently,  such  money  is  always  at  a 
discount  equal  to  the  difference  of  exchange. 
It  is  the  business  of  exchange  to  convert  the 
money  of  one  country  into  the  money  of  an- 
other country.  Every  banking  institution  do- 
ing an  exchange  business  will  inform  a  cus- 
tomer without  delay  how  much  American 
money  it  will  take  to  buy  a  thousand  rubles 
in  Russia,  a  thousand  rupees  in  India,  or  a 
thousand  yens  in  Japan,and  the  banks  engaged 
in  the  business  of  exchange  in  those  countries 
will  as  readily  inform  their  customers  how 
much  of  their  money  it  will  take  to  buy  a  thou- 
sand American  dollars  in  the  United  States. 

Foreign  commerce  consists  of  the  exchange 
of  commodities.      Everything  that  goes  from 


61 

one  cotfntry  to  another  through  the  channels 
of  commerce  goes  for  the  purpose  of  exchang- 
ing the  commodities  of  one  country  for  the 
commodities  of  another.  It  requires  two 
transactions  to  make  a  foreign  exchange,  the 
same  as  it  does  to  exchange  commodities  at 
home.  Our  goods  are  sent  to  France,  for  ex- 
ample, and  sold  for  French  money.  It  makes 
ho  difference  whether  we  send  gold,  silver,  cot- 
ton, or  pork.  When  we  have  acquired  French 
money  the  transaction  of  exchange  is  only  half 
consummated.  We  then  buy  French  goods 
with  the  French  money  which  we  have  thus 
acquired.  This  double  transaction  completes 
the  exchange  of  our  commodities  for  the  com- 
modities of  France.  The  only  interest  we  have 
in  French  money  is  to  know  that  it  will  buy 
French  goods  and  how  much,  and  the  only 
interest  the  French  people  have  in  our  money 
is  to  know  that  it  will  buy  American  goods  and 
how  much. 

There  can  be  no  doubt  that  gold  as  a  com- 
modity is  a  convenient  export  on  account  of 
the  extensive  demand  for  it  in  foreign  coun- 
tries for  coinage  into  money.  Besides,  we  know 
in  advance  how  mucli  mouey  our  gold  bullion 


62 

will  fetch  in  foreign  markets  because  its  price 
is  already  fixed  by  their  mint  laws.  This  was 
equally  true  of  silver  for  thousands  of  years 
previous  to  1873.  The  price  of  all  other  kinds 
of  money  must  be  determined  by  market  con- 
ditions independent  of  local  laws.  The  price 
of  silver  was  substantially  the  same  in  all 
countries,  while  enough  mints  were  open  to 
the  unlimited  coinage  of  both  metals  to  main- 
tain the  bimetallic  tie  and  make  the  coin  of 
the  two  metals  practically  one  money. 

The  mint  privileges  of  gold  in  foreign  coun- 
tries, which  make  gold  bullion  equivalent  to 
coin  in  their  markets,  does  not  add  to  its  de- 
sirability as  a  circulating  medium  in  the  coun- 
tries where  it  is  coined.  When  paper  and  sil- 
ver are  endowed  with  the  money  function  they 
are  more  reliable  and  safer  for  use  as  money 
than  gold.  Take,  for  example,  the  silver  coins 
and  silver  certificates  of  the  United  States. 
They  perform  all  the  functions  of  money  at 
home  which  gold  can  perform,  and  we  have 
seen  that  our  gold  coin  has  no  money  functions 
abroad.  The  habits  of  silver  and  paper  money 
are  much  better  than  the  habits  of  gold  money. 
They  are  domestic  in  their  nature  and   are 


63 

found  at  home  when  required  for  use.  They 
do  not  run  away  and  get  locked  up  by  the 
financial  poundmasters  on  the  other  side  of  the 
Atlantic.  All  the  people  know  how  faithfully 
silver  certificates  stay  at  home  and  circulate 
from  hand  to  hand.  No  raids  on  the  Treasury 
are  made  with  them.  They  are  the  best  pos- 
sible money  for  every  purpose,  except  manipu- 
lating the  market  and  stock  jobbing. 

The  dealers  in  gold  are  very  much  opposed 
to  silver  certificates,  or  any  other  kind  of 
money  which  they  cannot  impound  in  foreign 
countries,  and  then  compel  the  United  States 
to  issue  gold  bonds  with  which  to  buy  it  back 
and  bring  it  home.  When  our  gold  goes  to 
England  it  is  converted  into  English  coin 
without  charge,  and  becomes  English  for  both 
commercial  and  war  purposes.  The  same  is 
true  when  it  goes  to  France  and  Germany;  it 
becomes  French  or  German  coin  as  readily 
as  it  becomes  English  coin,  through  the  natu- 
ralization laws  of  the  mints  of  those  countries. 
All  other  kinds  of  money  except  gold  must 
necessarily  have  a  home  and  a  country.  No 
kind  of  money  but  gold  can  be  naturalized  in 
foreign    mints   and    made    an    enemy    of   the 


64 

United  States.  Our  laM's  creating  moui'v  are 
known  and  recognized  all  over  the  world,  and 
any  money  current  in  the  United  States  will 
sell  in  any  foreign  country  for  its  value  in  this 
country,  less  the  difference  of  exchange.  No 
money  except  gold  will  desert  the  flag  and  stay 
abroad  and  fight  the  battles  of  other  countries. 
Gold  will  never  be  the  best  money  that  can 
be  made  until  there  is  some  law  to  punish  it 
for  desertion. 

Various  countries  have  at  different  times 
put  an  export  duty  on  their  gold  coin  to  keep 
it  at  home.  Others  have  charged  seigniorage 
on  coining,  thereby  making  gold  coin  more 
valuable  for  home  use  than  for  export.  Gold 
is  such  a  confirmed  traitor  that  every  civil- 
ized nation  in  the  world  has  been  compelled  to 
banish  it  in  times  of  great  emergency.  Every 
modern  state  has  been  compelled  in  time  of 
war  to  use  its  sovereign  power  to  create  money 
which  would  stay  at  home  and  fight  its  bat- 
tles. No  great  war  involving  the  existence  of 
a  nation  has  ever  been  fought  with  gold  or 
on  a  gold  basis.  Silver,  while  the  mints  were 
open,  might  be  exported  to  the  injury  of  the 
country  coining  it,  but  not  to  the  same  extent 


05 

as  gold  could  be  exported.  It  was  a  very 
much  better  money  than  gold  in  time  of  war, 
on  account  of  its  bulk,  its  denomination,  and 
the  distribution  of  its  coins.  It  could  not  be 
easily  gathered  up  into  great  hoards  or  trans- 
ported. Gold  was  always  the  money  of  the 
speculative  class,  who  seldom  fight  the  bat- 
tles of  their  country.  While  the  mints  were 
open,  silver  was  the  money  of  those  who 
created  the  wealth  of  a  nation  in  time  of  peace 
and  fought  its  battles  in  time  of  war. 

It  is  almost  impossible  to  exaggerate  the 
injuries  done  to  a  country  by  the  wholesale  ex- 
port of  its  money.  The  export  from  this  country 
of  about  a  hundred  millions  of  gold  to  Austria 
in  1892-3,  to  form  a  reserve  to  enable  that 
country,  through  the  Rothschilds  syndicate, 
to  convert  |2,400,000,000  of  Austrian  silver 
bonds  into  $2,800,000,000  of  gold  bonds,  was 
most  disastrous.  The  panic  which  it  pro- 
duced injured  the  people  of  the  United  States 
thousands  of  millions,  and  its  baneful  effects 
are  still  everywhere  visible.  If  our  Govern- 
ment had  exercised  its  stipulated  option  to 
redeem  its  notes  either  in  silver  or  gold,  by 
refusing  gold  for  export,  no  gold  would  have 


66 

been  exported,  and  the  panic  of  1893  would 
not  have  occurred.  What  stronger  argument 
can  be  made  against  an  exclusively  gold 
''money  good  all  over  the  world,"  or,  which 
amounts  to  the  same  thing,  money  made  of  a 
material  convenient  for  export  and  which  can 
be  converted  into  the  money  of  all  countries 
without  loss,  than  the  object  lesson  of  the 
panic  of  1893  caused  by  the  export  of  our 
gold? 

The  contention  that  gold  is  necessary  to 
carry  on  foreign  commerce  is  one  of  the  false 
and  deceptive  dogmas  of  the  gold  monometal- 
lists.  While  gold  was  at  a  premium,  and  the 
Indian  mints  were  open  to  the  coinage  of  sil- 
ver, Indian  commerce  with  foreign  countries  in- 
creased without  a  parallel.  The  year  preced- 
ing the  suspension  of  coinage  in  India  that 
country  exported  sixty  million  bushels  of 
wheat,  fifty-three  million  dollars'  worth  of  raw 
cotton,  fifty  million  dollars'  worth  of  textile, 
fabrics,  and  vastly  more  jute  and  opium  than 
ever  before.  She  paid  eighty  million  dollars 
of  gold  interest  in  London  without  increasing 
taxation.  Since  the  suspension  of  silver  coin- 
age her  exports  have  declined,  her  foreign  debt 


67 

has  been  greatlj  augmented,  and  millions  of 
her  people  have  starved  to  death  for  want  of 
money  to  buy  food,  although  there  was  abun- 
dance of  rice  to  be  had  for  a  cent  a  pound  and 
plenty  of  wheat  in  the  market  at  a  less  price 
than  the  cost  of  production  in  this  country. 
Chile  and  Japan  are  to-day  suffering  all  the 
miseries  of  financial  depression  on  account  of 
the  suspension  of  the  coinage  of  silver  and  the 
adoption  of  the  gold  standard,  while  Mexico, 
with  her  mints  open  to  the  coinage  of  both 
metals,  presents  an  object  lesson  of  prosperity 
surpassing  the  success  of  any  other  country  in 
the  nineteenth  century,  when  her  condition 
twenty  years  ago  is  taken  into  consideration. 

A  foreign  demand  for  the  wheat,  cotton  and 
other  products  of  the  farm  enhances  the 
price  of  such  commodities,  stimulates  their 
production,  increases  the  demand  for  labor, 
brings  money  into  the  country,  and  furnishes 
a  market  for  the  products  of  the  mills,  facto- 
ries, foundries,  and  all  other  industrial  estab- 
lishments; whereas  a  foreign  demand  for 
gold,  which  takes  away  our  money,  reduces 
the  price  of  all  our  commodities,  bankrupts  the 
debtor,  and  produces  stagnation,  misery  and 
want. 


68 

The  pathetic  appeal  of  our  ex-Presidents  in 
behalf  of  the  laboring  masses  of  this  country 
for  ''money  good  all  over  the  world"  seems  to 
assume  that  laboring  men  do  their  marketing 
in  Europe.  These  monometallists  would  do 
themselves  more  credit  if  they  would  frankly 
tell  the  people  that  gold  for  export  would 
create  a  scarcity  of  money  at  home  and  make 
it  more  difficult  for  them  to  obtain  any  kind 
of  money  with  which  to  pay  their  bills  at  the 
grocery. 

The  historian  of  the  future  will  be  bewil- 
dered when  he  compares  the  financial  teach- 
ings of  Aristotle  with  the  dogmas  of  the  gold 
monometallists  of  our  time,  who  contend  that 
the  commodity  gold  is  money  in  and  of  itself, 
and  that  good  money  cannot  be  created  by  the 
use  of  any  other  material.  If  he  should  attempt 
to  make  dates  correspond  with  the  condition 
of  civilization,  he  would  probably  assign  the 
teachings  of  the  gold  monometallists  to  a  pe- 
riod long  anterior  to  the  building  of  the  pyra- 
mids, and  the  teachings  of  Aristotle  to  the 
age  of  railroads,  telegraphs,  telephones,  and 
other  marvelous  inventions  which  now  con- 
trol the  forces  of  nature. 


69 


PARITY. 

All  the  commercial  nations  of  the  world  con- 
ducted their  commerce  on  the  bimetallic  stand- 
ard previous  to  1873,  although  some  of  them 
did  not  coin  both  metals;  but  the  nations 
which  did  coin  both  metals  maintained  the 
parity  between  gold  and  silver  at  the  ratio  of 
about  15|  to  1  throughout  the  world.  In  the 
language  of  the  Royal  Commission  of  Eng- 
land, the  coins  of  the  two  metals  for  commer- 
cial purposes  were  regarded  as  one  money. 
The  fact  that  England  and  Portugal  did  not 
coin  silver,  and  that  India  and  other  Asiatic 
countries  did  not  coin  gold,  did  not  destroy  the 
bimetallic  tie  so  long  as  the  United  States  and 
France  and  other  European  countries  coined 
both  gold  and  silver  without  limitation  or  dis- 
crimination against  either  metal.  France,  es- 
pecially, acted  as  the  great  clearing-house  of 
the  world  for  gold  and  silver  for  more  than 
seventy  years  previous  to  1873.  No  one  in 
any  part  of  the  world  having  either  gold  or 
silver  bullion  would  part  with  it  for  a  less 
amount  of  money  than  it  would  produce  at  the 
French  mint. 


70 

After  the  United  States  and  France  and  the 
other  nations  of  Europe  closed  their  mints 
against  silver  there  was  no  commercial  na- 
tion where  both  gold  and  silver  bullion  could 
be  converted  into  coin  for  the  benefit  of  the 
owner.  The  bimetallic  tie  which  made  gold 
and  silver  one  money  for  commercial  purposes 
was  broken  and  the  value  of  each  metal  was 
regulated  by  the  demand  for  coinage  in  the 
countries  which  accorded  it  the  privilege  of 
mintage.  The  demand  of  the  United  States 
and  Europe  for  the  purpose  of  coinage  fell  on 
gold  alone,  while  the  demand  for  coinage  pur- 
poses of  Asia,  Mexico  and  South  America 
nearly  all  fell  upon  the  white  metal.  There 
was  a  greater  demand  for  gold  in  the  gold- 
standard  countries  in  proportion  to  the  supply 
of  gold  than  there  was  for  silver  in  the  silver- 
standard  countries  in  proportion  to  the  sup- 
ply of  silver.  There  was  no  great  national 
clearing-house  to  maintain  the  bimetallic  tie 
and  the  bullion  value  of  the  two  metals  was 
regulated  by  the  demand  for  each  in  proportion 
to  the  supply.  The  inadequate  supply  of  gold 
in  the  gold-standard  couutries  has  raised  the 
price  of  that  metal  fully  one  hundred  per  cent. 


71 

above  the  level  of  prices  for  commodities,  but 
the  demand  for  silver  in  the  silver-standard 
countries  has  not  exceeded  the  supply  as 
shown  by  the  stability  of  general  prices  in 
those  countries. 

The  rupee  in  India,  from  1873  to  1893,  when 
its  coinage  was  suspended,  was  as  stable  in  its 
value  or  purchasing  power  as  any  money 
which  ever  circulated.  It  upset  the  theories 
of  the  empirics  of  the  gold-standard  school 
because  it  refused  to  fluctuate,  and  the  general 
level  of  prices,  expressed  in  rupees,  remained 
substantially  stationary.  They  called  it  the 
"perverse  rupee,"  because  its  purchasing 
power  was  substantially  the  same  while  the 
mints  of  India  were  open  to  the  unlimited  coin- 
age of  silver.  But  the  rise  in  the  purchasing 
power  of  gold  in  the  gold-standard  countries, 
while  the  purchasing  power  of  silver  remained 
stationary  in  the  silver-standard  countries, 
produced  a  difference  of  exchange.  This  dif- 
ference of  exchange  has  been  constantly  in- 
creasing as  one  country  after  another  demone- 
tized silver  and  joined  the  gold  standard  coun- 
tries, thereby  enlarging  the  demand  for  gold 
and  decreasing  the  demand  for  silver.       If  :i 


72 

sufficient  number  of  the  commercial  nations 
now  on  the  gold  standard  would  open  their 
mints  to  silver  and  abandon  gold  to  equalize 
the  demand  for  the  two  metals  in  proportion 
to  the  supply  of  each,  parity  would  be  restored, 
but  it  would  probably  be  impossible  to  main- 
tain  such  parity  without  the  bimetallic  tie 
which  some  great  commercial  country  would 
afford  if  its  mints  were  open  to  the  unlimited 
coinage  of  both  metals. 

Without  a  bimetallic  nation  to  act  as  a 
clearing-house  of  exchange  the  relative  value 
of  the  two  metals  would  fluctuate  with  every 
increase  of  demand  for  or  supply  of  either, 
France  performed  the  function  of  a  clearing- 
house between  the  gold-standard  countries  and 
the  silver-standard  countries  for  seventy-five 
years,  because,  as  already  remarked,  no  one 
would  part  with  either  silver  or  gold  bul- 
lion for  a  less  amount  of  money  than  could  be 
procured  at  the  French  Mint.  It  is  very  prob- 
able that  the  United  States,  with  double  the 
population  and  resources  of  France,  by  adopt- 
ing free  coinage  at  the  ratio  of  16  to  1,  could 
restore  the  bimetallic  tie  and  maintain  sub- 
stantial parity  between  the  coins  of  the  two 


73 

metals.  Free  coinage  of  silver  in  the  United 
States  would  not  only  enormously  increase  the 
demand  for  silver  and  diminish  the  demand  for 
gold,  but  it  would  restore  the  parity  so  long  as 
no  person  would  sell  his  silver  bullion  or  his 
gold  bullion  for  a  less  amount  of  coin  than  it 
would  produce  at  the  United  States  Mint.  If 
the  parity  should  not  be  restored  by  unlimited 
coinage  of  the  two  metals  in  the  United  States, 
the  effect  of  independent  actfon  by  this  coun- 
try would  force  enough  European  countries  to 
open  their  mints  to  silver  and  restore  the 
bimetallic  tie  to  again  make  the  coins  of  gold 
and  silver  one  money  for  commercial  purposes 
throughout  the  world. 


75 


FOREIGN  COMMERCE. 

The  increase  of  the  supply  of  money  which 
would  result  from  the  unlimited  coinage  of  sil- 
ver at  the  established  ratio  would  so  stimulate 
the  productions  of  the  farms  and  workshops 
of  this  country  as  to  enormously  enhance  the 
demand  for  the  products  of  labor  at  home  by 
furnishing  money  to  enable  the  people  to  buy 
and  satisfy  their  wants,  now  unsupplied.  It 
would  at  the  same  time  vastly  increase  our 
exports,  because  the  natural  resources  of  the 
United  States  and  the  skill  and  energy  of  the 
American  people,  with  a  proper  volume  of 
money,  would  enable  this  country  to  pay 
higher  wages  and  advantageously  undersell 
any  other  country  in  the  world  in  many,  if  not 
all,  of  the  staple  products  of  industry.  If, 
happily,  we  could  obtain  a  sufficient  supply  of 
silver  to  dispense  for  the  time  being  with  the 
use  of  gold  for  speculative  purposes  (for  we 
use  it  for  no  other),  and  increase  the  volume 
of  money  sufficiently  to  raise  the  level  of  prices 
above  the  European  level,  we  know  by  the  ob- 
ject lesson  furnished  by  other  countries  that 


76 

Europe  would  be  forced  to  open  her  mints  to 
the  coinage  of  silver  or  suffer  bankruptcy, 
while  we  would  be  more  prosperous  than  ever 
before. 

Attention  is  again  called  to  India,  Japan, 
Chile  and  Mexico  to  show  the  marvelous  ad- 
vantage which  silver-standard  countries  en- 
joy over  those  bound  down  to  a  shrinking  sup- 
ply of  gold  coin.  Free  coinage  of  silver  in 
India  enabled  her  to  develop  her  industries 
and  prosper,  while  gold-standard  England  was 
closing  her  factories  because  she  was  unable  to 
compete  in  the  Oriental  market  with  the  Hin- 
doos. The  advantages  which  silver-standard 
India  had  over  gold-standard  England  are 
shown  by  the  proceedings  of  the  Industrial  As- 
sociations of  the  British  Isles  and  the  debates 
in  Parliament  in  favor  of  legislation  to  equalize 
the  difference  of  exchange.  The  difference  of 
exchange  between  India  and  England  on  ac- 
count of  the  enhanced  purchasing  power  of 
gold  was  the  evil  complained  of  by  the  busi- 
ness men  and  manufacturers  of  the  home  gov- 
ernment, as  shown  by  their  petitions  to  Par- 
liament. The  reason  for  the  suspension  by 
Great  Britain  of  the  coinage  of  silver  in  India, 


77 

and  for  the  futile  attempts  which  are  still  be- 
ing made  to  put  India  on  a  gold  basis,  is  the- 
alleged  necessity  of  removing  the  advantages 
in  trade,  commerce  and  manufacture  which 
the  free  coinage  of  silver  gave  India  over  the 
inhabitants  of  the  British  Isles.  Chile  was 
the  most  prosperous  and  progressive  of  the 
countries  of  South  America  while  gold  and 
silver  could  be  coined  at  her  mints  on  equal 
terms.  In  an  hour  of  folly  she  demonetized 
silver  and  has  since  fallen  into  depression  and 
commercial  decay.  Japan  was  aroused  from 
her  sleep  of  centuries  by  the  stimulus  which 
the  free  coinage  of  silver  gave  her  after  the' 
United  States  and  Europe  were  forced  into 
stagnation  by  the  single  gold  standard.  The 
difference  of  exchange  which  Japan  enjoyed  in 
trading  with  foreign  countries,  and  the  impetus 
which  the  increasing  volume  of  money  gave  her 
home  industries,  enabled  her  with  marvelous 
speed  to  advance  to  a  first-class  power.  She, 
like  Chile,  has  fallen  by  the  wayside  and 
adopted  the  gold  standard,  and  her  glory  is 
departing  through  the  agonies  of  depression 
and  bankruptcy.  Mexico,  by  the  free  coinage 
of  silver,  has  risen  in  twenty  years  from  the 


78 

lowest  depths  of  depression  and  poverty  of 
industries  to  the  enjoyment  of  a  degree  of 
prosperity  unknown  in  the  land  of  the  Monte- 
zumas. 

The  contention  that  an  adequate  supply  of 
money  promotes  internal  trade  and  stimulates 
business  at  home  has  never  been  successfully 
questioned.  A  volume  of  money  which  will 
sustain  the  stability  of  general  prices  is  just 
as  necessary  in  foreign  commerce  as  in  domes- 
tic trade.  An  inadequate  supply  of  money 
means  disaster  in  trade  and  commerce,  wheth- 
er foreign  or  domestic.  It  means  stagnation, 
enforced  idleness  and  poverty.  Successful  pro- 
duction without  sufficient  money  is  an 
impossibility.  Want  of  money  is  the 
primary  cause  of  failure.  The  reason  is 
that  money  is  the  instrument  of  production. 
Production  is  conducted  through  the  agency  of 
money.  Money  buys  everything  which  enters 
into  the  production  of  commodities,  including 
the  wages  of  labor.  Money,  therefore,  must 
precede  the  production  of  commodities  both 
for  consumption  at  home  and  for  export  to 
foreign  countries.  When  the  volume  of 
money  is  sufficient   to   maintain   stabilitv   of 


79 

prices  at  home,  production  will  be  stimulated 
and  the  resources  of  the  country  will  be  de- 
veloped and  made  available  for  foreign  mar- 
kets as  well  as  for  domestic  use.  An  inade- 
quate supply  of  money  retards  production  and 
adds  to  its  cost,  while  an  adequate  supply  of 
money  adds  to  production  and  reduces  the  ex- 
pense. This  is  why  the  Textile  Fabric  Asso- 
ciations of  England  could  not  compete  with 
the  manufacturers  of  India  while  the  Indian 
mints  were  open,  and  this  is  why  Europe  could 
not  successfully  compete  with  the  United 
States  under  free  coinage  by  independent  ac- 
tion if  gold  should  go  to  a  premium.  It  is  a 
common  saying  among  the  financiers  of  Eu- 
rope that  the  difference  of  exchange  betweeen 
gold-standard  countries  and  silver-standard 
countries  amounts,  in  effect,  to  a  bounty  on 
the  exports  of  the  silver-standard  countries 
-and  a  tax  on  their  imports. 


81 


LABOR  INTERESTS. 

Gold  monometallists  assure  the  laboring 
men  that  it  is  to  their  advantage  to  enhance 
the  purchasing  power  of  money,  because  it  will 
make  property  of  every  kind  cheaper.  It  is 
true  that  the  dearer  money  is  the  cheaper 
property  will  be,  and  that  the  greater  the  pur- 
chasing power  of  money  the  more  a  given 
amount  of  money  will  buy  of  the  necessaries  of 
life.  There  can  be  no  doubt  that  people  who 
have  fixed  incomes — whether  derived  from  in- 
terest on  money,  from  annuities,  or  from  per- 
manent employment  at  fixed  salaries — are  ben- 
efited by  dear  money  and  cheap  property,  but 
cheap  labor  must  be  the  result  of  cheap  prop- 
erty. The  fact  that  a  laborer,  while  he  has  em- 
ployment, can  buy  more  of  the  necessaries 
of  life  with  his  wages  does  not  mean  that 
dear  money  and  cheap  property  are  bless- 
ings to  the  laboring  man.  The  efforts 
of  labor  organizations  may  for  a  time 
keep  up  the  price  of  day  wages,  and  those  who 
can  find  work  may  enjoy  a  temporary  benefit, 
but  the    struggle    of    the    employer    against 


82 

his  employes  to  force  down  the  wages  of  la- 
bor to  correspond  with  the  general  range  of 
prices  will  never  cease  until  the  wages  of  labor 
and  the  prices  of  property  find  a  common  level. 
The  laborers  in  the  United  States  as  a  whole 
are  not  now  receiving  within  a  given  length  of 
time  fifty  per  cent,  as  much  in  the  aggregate 
as  they  would  if  the  volume  of  money  in  circu- 
lation were  sufficient  to  develop  the  resources 
of  the  country  and  create  general  prosperity. 
Very  few  wage-earners  are  receiving  the  same 
wages  which  they  formerly  did,  and  those  that 
have  employment  are  seldom  allowed  to  work 
full  time.  There  are  millions  out  of  employ- 
ment entirely,  and  hundreds  of  thousands,  if 
not  millions,  of  those  who  find  work  are 
forced  to  be  idle  a  large  part  of  the  time. 

The  more  important  consideration,  however, 
affecting  the  conditions  of  the  laboring  masses 
is  the  opportunity  which  an  adequate  supply 
of  money  and  stable  prices  afford  to  escape 
from  the  condition  of  wage-earners  by  success- 
fully entering  into  industrial  pursuits  on  their 
own  account.  A  shrinking  volume  of  money 
cuts  off  all  opportunities  for  advance- 
ment among  the  laboring  classes,  because,  if 


83 

the  property  they  produce  by  their  industry 
and  enterprise  is  constantly  growing  less  and 
less  in  value,  profits  which  good  prices  would 
afford  and  without  which  accumulations  are 
impossible  are  converted  into  loss.  Falling 
prices  under  the  gold  standard  compel  consoli- 
dations and  combinations  of  persons  engaged 
in  the  same  pursuit.  Self-preservation  com- 
pels them  to  combine  their  efiforts  and  monopo- 
lize the  business,  which  destroys  individual 
opportunities.  Nearly  every  line  of  business 
in  the  United  States  has  been  consolidated 
into  combinations  or  trusts  under  the  baneful 
influence  of  the  gold  standard,  as  a  means  of 
self-preservation.  This  has  cut  off  the  oppor- 
tunities which  were  once  open  to  all  to  ac- 
quire wealth  and  independence.  The  privi- 
leges which  the  people  of  this  country  enjoyed 
to  better  their  conditions  and  increase  their 
comforts  are  passing  away,  and  the  conditions 
of  the  Old  World,  where  the  rule  is:  "Once  a 
laborer  always  a  laborer,  to  the  remotest  gen- 
eration," are  becoming  insurmountable  obsta- 
cles to  advancement  in  this  boasted  land  of 
equal  opportunities. 


84 

The  condition  of  the  wage-earner  does  not 
depend  so  much  upon  the  rate  of  wages  as 
upon  constant  employment  for  himself  and  all 
other  wage-earners.  Above  all,  it  is  of  para- 
mount importance  that  he  shall  have  an  oppor- 
tunity of  acquiring  property  and  becoming  a 
proprietor  instead  of  a  mere  drudge. 

From  every  point  of  view  the  equal  and  un- 
limited coinage  of  both  metals  would  be  bene- 
ficial. It  would  increase  the  volume  of  legal- 
tender  money,  stop  falling  prices,  furnish  op- 
portunities for  honest  industry',  and  add  to  the 
comfort  and  happiness  of  the  American  people. 
Under  it  the  United  States  could  maintain  a 

m 

higher  level  of  wages  and  undersell  in  foreign 
markets  all  the  gold-standard  countries  in  the 
world,  because  our  industries  would  be  freed 
from  the  grinding  process  of  a  shrinking  vol- 
ume of  money.  Our  productions  and  our  ex- 
ports would  be  vastly  increased,  the  demand 
for  labor  would  furnish  employment  for  every 
w'illing  hand  at  higher  wages,  the  money  which 
would  be  paid  for  labor  would  be  abundant  to 
secure  the  comforts  of  life,  and  the  laudable 
ambition  of  laboring  men  to  rise  above  the 
hard  condition  of  the  day  laborers  of  the  Old 
World  would  be  gratified. 


85 


BANK  CURRENCY. 

The  issuance  of  paper  money  is  the  most  lu- 
crative business  invented  bv  the  genius  of  man. 
When  the  Government  issues  a  million  dollars 
of  full  legal-tender  money,  puts  it  in  the  Treas- 
ury of  the  United  States^  and  adds  it  to  the 
circulation  by  paying  it  out  for  current  ex- 
penses, it  saves  the  tax-payers  just  one  million 
dollars.  When  a  bank  issues  a  million  of 
currency  it  puts  a  million  of  currency  into  its 
vaults  and  loans  it  out  on  good  security  for  as 
high  a  rate  of  interest  as  possible.  This  trans- 
action creates  a  million  of  wealth  for  the  bank 
so  long  as  it  remains  a  bank,  because  if  any 
portion  of  the  issue  should  be  sent  back  for 
redemption,  other  currency  of  an  equal  amount 
would  be  immediately  issued.  The  only  event 
in  which  the  assets  of  the  bank  can  be  drawn 
upon  on  account  of  its  circulating  notes  is  a 
failure  of  the  bank.  When  the  bank  fails  the 
holders  of  the  notes  have  a  right  to  find  what 
property  they  can  which  belongs  to  the  bank. 
If  they  find  nothing  the  entire  issue  of  the 


86 

bank  will  be  a  dead  loss  in  the  hands  of  inno 
cent  holders  of  the  notes. 

All  the  financial  plans  which  the  banks  have 
pressed  upon  the  attention  of  the  country  for 
the  last  few  years  have  had  for  their  object  the 
substitution  of  bank  money  for  Government 
money,  to  give  the  banks  the  privilege  of  is- 
suing a  thousand  millions  or  more  of  currency 
and  thus  add  to  the  wealth  they  have  already 
accumulated  under  the  national  banking  law. 
When  they  propose  to  issue  gold  bonds  and 
buy  up  the  greenbacks,  Treasury  notes,  cur- 
rency certificates  and  silver  certificates,  and 
sell  the  silver  in  the  Treasury  for  what  it  will 
fetch,  they  do  not  tell  the  people  that  their 
object  is  to  issue  bank  money  to  themselves  on 
which  to  conduct  the  banking  business  to  the 
full  extent  of  the  Government  money  retired. 
The  difiiculty  about  the  success  of  such  a 
scheme  consists  in  devising  means  to  conceal 
the  real  purpose  of  the  banks.  The  elaborate, 
conflicting  and  ambiguous  plan  of  the  experts 
of  the  Indianapolis  conference,  the  voluminous 
speeches,  interviews,  bills  and  recommenda- 
tions of  the  Secretary  of  the  Treas- 
ury,    and     the     various     other     plans      de- 


87 

vised  by  the  bank  party  are  contrivances 
to  confuse  and  bewilder  the  uninitiated, 
but  when  reduced  to  their  last  analysis  two 
objects  will  appear:  1.  To  more  thoroughly 
commit  the  United  States  to  the  single  gold 
standard.  2.  To  retire  Government  money  by 
the  issuance  of  gold  bonds  and  to  put  out  in 
lieu  thereof  bank  money.  They  are  opposed  to 
bimetallism  because  if  both  metals  were  used 
the  volume  of  coin  would  interfere  with  the 
profits  of  the  banks  in  issuing  money  and 
would  deprive  them  of  the  power  to  expand 
and  contract  the  circulating  medium  for  the 
benefit  of  speculation.  It  must  be  remembered 
that  when  the  banks  issue  money  the  people 
get  none  of  it,  it  all  goes  into  the  banks  for 
their  own  benefit;  but  when  the  Government 
issues  paper  money  it  goes  into  the  Treasury 
and  is  paid  out  in  lieu  of  taxes,  reducing  to 
that  extent  the  burdens  of  the  people.  The 
contention  that  bank  money  is  so  much  better 
than  Government  money  that  the  people  can 
afford  to  make  almost  any  conceivable  sacri- 
fice to  secure  bank  issues  in  preference  to  Gov- 
ernment money,  ought  not  to  deceive  anyone. 
It  must  constantly  be  borne  in  mind  that 


88 

money  is  the  creation  of  law,  and  that  it  is 
stamped  or  printed  on  gold,  silver,  or  paper, 
the  same  as  municipal  laws  are  printed  on  pa- 
per and  bound  in  books.  It  must  also  be  re- 
membered that  the  quality  of  money  depends 
upon  its  quantity.  Too  much  inflates  prices 
and  injures  the  creditor;  too  little  forces  down 
prices,  paralyzes  industries  and  does  injustice 
to  the  debtor;  just  enough  is  that  volume 
which  will  maintain  the  stability  of  general 
prices,  do  justice  between  debtor  and  creditor, 
and  secure  equality  before  the  law  in  the  busi- 
ness transactions  of  the  country. 

The  contention  that  bank  money  is  better 
than  Government  money  will  now  be  exam- 
ined. Government  money  is  the  mandate  of 
law  which  compels  creditors  to  receive  it  in 
payment  of  debts.  It  does  not  depend  upon 
the  wealth  of  the  nation  any  more  than  does 
the  law  inflicting  punishment  for  crime  or  the 
law  giving  a  right  of  action  for  breach  of  a 
contract.  Government  money  is  absolutely 
good  money  as  long  as  the  Government  exists 
and  has  power  to  enforce  its  municipal  laws. 
Bank  money  cannot  be  clothed  with  all  the 
functions  of   money,   and   its   value   depends 


89 

upon  the  solvency  of  the  bank  issuing  it.  The 
only  legal-tender  function  which  bank  money 
has  is  in  the  payment  of  debts  due  to  the 
bank  issuing  it.  People  may  be  compelled  to 
use  bank  money  when  the  Government  money 
is  withdrawn,  but  the  holders  of  bank  notes 
must  take  the  risk  of  the  failure  of  the  bank. 
Some  banks  remain  solvent  for  a  long  time, 
but  nearly  all  of  them  fail  sooner  or  later  and 
the  note-holders  sufifer.  There  was  so  much 
distrust  of  bank  issues  under  the  old  State 
bank  system  that  a  traveler  rarely  escaped 
suffering  a  discount  on  his  money  every  time 
he  passed  a  State  line. 

The  present  so-called  bank  issues  are  in  fact 
Government  issues,  because,  if  the  banks  do 
not  redeem  them  the  Government  must.  They 
circulate  all  over  the  Union,  not  on  the  credit 
of  the  banks,  but  on  the  credit  of  the  Govern- 
ment. Thus  the  bankers  succeed  in  drawing 
the  Government  into  the  banking  business; 
but  unfortunately  the  Government  owes  all 
the  debts  while  the  bankers  enjoy  all  the  as- 
sets in  the  form  of  the  bank  circulation. 
The  banks  are  under  obligations  to  re- 
deem their  circulation  in  greenbacks,  the  same 


90 

money  which  they  tell  us  is  not  good  money. 
In  practice,  however,  the  national  banks  never 
redeem  their  circulation,  but  send  it  to  remote 
parts  of  the  country,  whence  it  seldom  finds  its 
way  back.  The  Government  alone  redeems 
national  bank  circulation,  which  it  is  com- 
pelled to  do  when  the  bank  fails. 

There  is  another  bad  feature  about  the  na- 
tional banking  law :  The  Government  does  not 
undertake  to  protect  depositors,  but,  by  allow- 
ing banks  to  be  incorporated  under  Federal 
law,  it  greatly  strengthens  their  credit  and 
enables  them  to  expand  and  draw  interest  on 
what  they  owe,  to  such  an  extent  that  when  a 
stringency  comes  they  are  compelled  to  call  in 
their  loans  and  break  their  customers,  if  they 
do  not  fail  themselves.  The  reserves  which  the 
law  requires  are  of  very  little  use.  The  banks 
are  permitted  to  send,  and  do  send,  nearly  all 
their  reserves  to  banks  in  a  few  cities  named 
as  reserve  cities  to  be  loaned  out  at  a  profit. 
When  the  country  banks  call  for  the  reserves 
they  can  seldom  get  them  in  times  of  trouble. 
In  the  great  crash  of  1893  all  the  leading  banks 
of  the  United  States  where  the  reserves  were 
held    formed  a  combination    and  refused  to 


91 

pay  the  drafts  of  the  country  banks  or  the 
checks  of  their  own  customers.  In  defiance 
of  law  they  actually  issued  over  $40,000,000 
of  their  own  notes,  and  called  them  "clearing- 
house certificates''  in  which  they  offered  to 
pay  and  refused  to  pay  in  anything  else. 

The  evidence  that  these  banking  institu- 
tions co-operated  with  the  Cleveland  ad- 
ministration to  bring  on  the  panic  of 
1893  was  once  abundant  and  has  not 
been  fully  suppressed,  and  their  sus- 
pension of  cash  payments  without  objection 
from  the  Executive  disclosed  the  dangerous 
character  of  the  national  banking  system.  If 
the  Comptroller  of  the  Currency  had  forced 
the  banks  in  the  clearing-house  combination 
to  pay  their  depositors  or  close  their  doors,  it 
would  have  bankrupted  the  entire  country, 
and  the  banks  themselves  would  have  been 
destroyed.  Notwithstanding  the  object  lesson 
thus  furnished  they  try  to  make  the  people  be- 
lieve that  the  banks  are  safer  than  the  Govern- 
ment. At  the  time  of  the  collapse  of  1893 
there  were  outstanding  over  forty-five  hun- 
dred millions  of  bank  credits,  on  only  five 
hundred  millions  of  nominal  reserves.     What 


92 

amount  of  cash  the  banks  held  of  their  de- 
positors' money  to  meet  this  enormous  volume 
of  bank  credit  the  country  will  never  know. 
In  other  words,  how  much  of  the  four  thousand 
millions  which  remained  after  deducting  the 
legal  reserves  was  purely  fictitious,  and 
how  much  was  secured  by  actual  cash,  must 
forever  remain  a  mystery.  The  habit  of  loan- 
ing depositors'  money  over  and  over  again  as 
it  is  re-deposited  in  the  bank  enormously 
swells  bank  indebtedness  upon  which  the  bank 
draws  interest.  When  the  crash  came  the 
banks,  as  usual,  drew  in  their  loans  and  ruined 
their  customers.  Many  of  the  banks  were  un- 
able to  save  themselves  and  went  down  with 
their  customers  in  one  common  ruin. 

But  because  banks  are  the  storm  center  of 
panics,  and  when  unrestrained  by  law  are  the 
most  dangerous  institutions  ever  organized, 
they  cannot  be  abolished,  as  they  are  a  great 
convenience.  They  are,  in  fact,  absolutely 
necessary  under  our  modern  methods  of  doing 
business.  They  ought  not,  however,  to  be  al- 
lowed to  usurp  the  functions  of  Government 
by  the  issue  of  money,  nor  ought  they  to  be 
allowed    to    loan    more    of   their    depositors' 


93 

money  than  can  be  done  with  absolutely  safe- 
ty. The  great  trouble  is  that  there  are  too 
many  banks.  This  makes  it  necessary  for 
them,  in  order  to  make  money,  to  lend  their 
depositors'  money  over  and  over  again,  so  as 
to  swell  their  indebtedness  upon  which  to- 
draw  interest. 

The  remedy  for  scarcity  of  money  sug- 
gested by  President  McKinley  in  his  mes- 
sage was  the  creation  of  more  banks 
on  smaller  capital.  This  might,  and 
undoubtedly  would,  create  more  bank 
credit,  but  it  would  hasten  the  coming 
panic  of  ruin,  bankruptcy  and  liquidation.  If 
there  were  fewer  banks,  with  larger  reserves, 
the  community  would  be  just  as  well  accommo- 
dated, the  depositors  better  protected,  and  the 
calamities  of  panic  less  frequent.  The  banks 
are  entitled  to  reasonable  compensation  for 
the  convenience  they  furnish  the  business  com- 
munity, but  that  compensation  ought  to  be  con- 
sistent with  safety  and  fair  dealing.  The 
swelling  of  bank  credits  to  draw  interest  on 
what  they  owe  is  a  great  temptation  to  banks, 
and  it  ought  to  be  restrained  within  reason- 
able limits  by  law  rigidly  enforced.     Such  re- 


94 

strictions  on  the  methods  of  doing  business  as 
would  make  the  banks  safe  institutions  would 
remove  the  temptation  for  the  establishment 
of  purely  speculative  banks  and  banks  on  in- 
sufficient capital,  and  would  enable  the  really 
sound  institutions  to  furnish  the  people  all  the 
accommodations  required,  and  at  the  same 
time  retain  in  their  vaults  fifty  per  cent,  of  the 
money  of  the  depositors. 

The  organization  of  banks  on  conservative 
•and  safe  principles,  with  strict  Governmental 
supervision,  and  the  exclusive  issuance  by  the 
Government  of  the  circulating  medium, 
whether  it  be  gold  or  silv'jr  or  paper,  required 
to  maintain  the  stability  of  prices,  would  pre- 
vent panics  and  seem  3  prosperity  and  tran- 
quility. 


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1 

o 

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